In the present hard financial times, most people are unable to find good stocks to invest in. Moreover, it is also not easy to jot down some money for investment purposes, given the turbulent economy. This is when investing directly in oil wells seems to be a more profitable idea. But then, many people are not quite sure of how exactly to make such an investment. Investing in oil and gas wells can be done in several ways. Some of them are –
- Limited Partnerships – Investors can have a limited partnership with an oil and gas company. If the company is not publically traded, a broker specializing in this area can help you access such type of businesses. Most of the times, such companies have very loyal following of investors and do not advertise at all. So finding such ventures may be a little difficult, but certainly not impossible. If you are capable of making a very large investment, you can also contact the company’s management for a private placement.
- Future Contracts – Investors can also buy derivatives like future contracts in oil and gas. The key point to remember is that although they are usually very profitable, they are also very risky because sometimes they expire without any worth and the entire investment is lost.
- ADRs (American Depositary Receipts) or Large Cap Stock – These can be bought from a broker. The returns are usually average. It is better to invest in companies that have a proven track record.
- ETFs or Mutual Funds – These are ideal for those who either want to invest a small amount or are new to the oil and gas industry. Investing in mutual funds or ETFs is generally safe and provides good exposure and insight into the way the oil and gas industry works.
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