Investing In Gas: 10 Tips
Here are investing in gas: ten tips on how to use gas as an investment. There are many different ways to participate in the market for gasoline and natural gas. For example, you can purchase a commodity contract on the futures market, or buy stock in a drilling company. If you use several different products, this will help to spread your risk. As with any investment, you should do some research on the type of gas product you want to buy before you commit your funds.
- There are Exchange Traded Funds, or ETFs, that you can buy to invest in gasoline and natural gas. By using an ETF, you will not have to buy only one or two gas-related stocks. Certain ETF’s already have a variety of gas stocks built into the price, so you are spreading your risk.
- Buying stock in a drilling company is one way of investing in gas. Be sure to perform some due diligence on the drilling company before you decide to invest in the stock. Make sure you are comfortable with the areas that they are drilling.
- Investing in gas by purchasing stock in a blue chip energy company is a popular choice among investors. Large companies also usually pay a quarterly dividend, which is an added bonus.
- Buy a gasoline or natural gas futures contract. There are substantial risks with commodity trading, and your investment account must be set up to allow for futures transactions. Proceed with caution if you do not have commodity trading experience.
- There are many mutual funds you can use for investing in gas. A mutual fund will help you diversify your gas investments over a broader range of companies.
- Use a gas investment as a way to hedge your overall investment portfolio. You can buy several stocks, a mutual fund or ETF, or use a commodity contract to help hedge your portfolio risk.
- Buy stock in smaller gas companies, but beware of the risk. These stocks can be highly volatile, so do not be afraid to sell if you become uncomfortable with the stock’s performance.
- If you want to invest in a foreign gas stock, you may want to use an ETF instead. Unless you are completely comfortable investing in foreign stocks, use an ETF that is comprised of gas-related international companies.
- Consider investing in gas on a monthly basis. This will spread your buys out so you have an average price.
- Monitor your gasoline or natural gas portfolio on a regular basis, to add or subtract as you see fit. Keep some unused funds in your investment account, so you can buy a gas product at a cheaper price after a market correction.