Investment risks

As with any investment, there are risks that come with investing through the Octopus Energy Collective. It’s important you fully understand these so you can decide if investments on the Collective are right for you.

This is not a complete list of risks. You should also review the project's share offer document and do your own research before investing.

Risks to consider

You’re responsible for your investments

If you decide to invest, you’re solely responsible for this decision and anything that happens as a result. For example, you should consider if you can afford to lose the money you invest, and if you can cover any tax you may incur from owning shares.

 It’s your responsibility to carry out background research before you invest. You should thoroughly review any documents supplied by a project, and you may want to seek financial, investment, or tax advice from a professional as the Collective does not provide this.

Past performance does not guarantee future returns

You can find data on a project’s historical financial performance (if applicable) in the project’s share offer document. Please note that past performance is not a reliable indicator of future performance, and does not guarantee the project’s future success or investment returns.

This is an illiquid investment

Investment liquidity refers to how easily you can get your money out of an investment. When you invest in a project on the Collective, your money is inaccessible for the entire investment term — making it an illiquid investment.

You can’t withdraw the money you’ve invested during the investment term. And for now, we won’t be offering a secondary market for you to sell your shares to other people.

This investment is not diversified

Diversification refers to spreading your money across a range of investments so that you’re less dependent on one performing well. When you invest in a project on the Collective, you’re essentially investing in one company, so you should consider how you’d be impacted if the project were to fail. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

Returns are not guaranteed

Projects aim to pay dividends at a fixed rate to investors every three months. However, you may receive a lower payment than expected — or no payment at all — if the project underperforms or fails.

You could lose the money you invest

The project you invest in will aim to buy your shares back from you at the end of the investment term. If it’s financially able to, the project will buy the shares at the same price you paid for them — giving you your original investment amount back. 

You are unlikely to be protected if something goes wrong

The Financial Services Compensation Scheme (FSCS) is a Government-backed scheme that can sometimes compensate you if you lose money through investing. 

Money held in your Octopus Energy Collective Wallet (like from a top-up or investment pay-out) is protected by the FSCS. However, once the money is invested into a project, it is not protected by FSCS. So, if you suffer a loss from the project underperforming or failing, you are unlikely to get compensation. 

The Financial Ombudsman Service (FOS) is a different service that aims to resolve disputes between consumers and financial firms. FOS will not compensate you if you make a loss from investing, but may be able to help you if you have a complaint against the Collective.