Google (Nasdaq: GOOG) is looking to get a little better return on its cash – by creating a $280 million fund with which SolarCity can expand its residential leasing program.
SolarCity is a full-service solar energy company providing design, financing, installation and monitoring for solar systems. Google’s money will be used to finance residential projects instead of homeowners paying for entire installations themselves. SolarCity has set up 15 such funds with various partners, totaling $1.28 billion.
Google, laden with cash, has been looking for ways to expand its “Do no evil” mantra with renewable energy. The company is invested in building a $5 billion wind power transmission corridor off the Atlantic coast and wind farms in North Dakota, and it has also made investments in thermal solar company BrightSource Energy.
Solar manufacturers should cheer anything that helps make solar power more accessible in the U.S. market. Established higher-efficiency companies like SunPower, Trina Solar, and Yingli Green Energy in particular should benefit.
Google is slowly turning itself into a major funding source for renewable energy companies. In time, that may become a major source of income for the company. (The Motley Fool owns shares of Google, and Motley Fool newsletter services have recommended buying shares of it.)
Ask the Fool
Q: Why do bond prices go up when bond yields go down? – N.P., Keene, N.H.
A: Bond prices react to changes in interest rates. If you buy a $1,000, 30-year bond with a 5 percent interest rate, it’ll pay you $50 per year until maturity, when you get your $1,000 back.
But if interest rates rise, that 5 percent won’t be able to compete with newer bonds’ higher rates. The value of your bond will have to drop to make it more attractive to buyers.
Someone selling that bond, then, might have to accept $950 for it instead of its original $1,000. The buyer will receive the same $50 annual payments and will receive the same $1,000 at maturity.
When interest rates drop, bond prices will rise as people will pay a premium for higher-yielding bonds.
Learn more at www.fool.com/ investing/basics/index.aspx and www.investinginbonds.com.
Q: What’s a “beneficial owner”? – H.L., South Bend, Ind.
A: A beneficial owner is the true owner of a security, such as a stock. If some assets are held for you in a trust through a brokerage, for example, you’re the beneficial owner.
It’s a common practice for brokerages to hold stocks in “street name” (i.e., their own name) instead of putting the shares in your name. This is routine, and the shares still belong to you. Thus, you remain the beneficial owner.
It often makes sense to leave shares in “street name” instead of having them registered to you and getting the actual certificates sent to you in the mail. That way, when you want to sell, you won’t have to find and mail back the certificates.
Learn more about brokerages at www.broker.Fool.com and www.sec.gov/answers/ openaccount.htm.
My dumbest investment
I’ve tried to ride the wave of major investment trends. Back in the 1990s, when “green power” was hot, I invested in a company that aimed to make pesticides unnecessary. I lost most of my money. I then turned to an “Asian tiger” and invested in Malaysia, losing $5,000. I switched to China and lost $3,000 there. Thinking real estate would restore my fortune, I bought a real estate investment trust and lost another $3,000. Could I be doing something wrong? – J.W., via email
The Fool responds: You have to be very patient for some trends to pay off. Environmentalism and alternative energies, for example, have been growing for many years and still seem to have a lot of room to run. Likewise, China and other developing economies are experiencing strong growth, but their returns for investors may stall or stumble now and then.
It’s also important to pick the right horses in each race, which can be especially hard early on. It’s sometimes best to wait, or to diversify with a variety of companies in a particular niche, perhaps via a mutual fund.