Are Solar Bonds Worth Buying?

Across the nation, thousands of homeowners are taking advantage of programs from SolarCity (NASDAQ: SCTY  ) , SunPower (NASDAQ: SPWR  ) , and other solar specialists to install solar systems. Many of those companies offer financing, and they're turning around and securitizing those financing arrangements into bonds to sell to investors. Does it make sense for you to buy those bonds?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about solar bonds and how they work. He points out that SolarCity recently said it would offer solar bonds directly to investors, and already, alternative services like Mosaic allow investors to get exposure to solar deals. Dan explains that the risk-reward analysis depends on the scope of the bond involved, with those including more projects having more diversification than those that hinge on a single project's success. Sticking to reputable companies makes the most sense in the early stages of solar financing, but if the rates turn out to compensate you for the risk involved, solar bonds might end up being a worthwhile investment.

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