Oil has a big impact on our economy.
How should oil and energy play a role in your portfolio?
The pros and cons of course are really important because like any other type of investment, you have to account for volatility, With energy, volatility can be high. When there are geopolitical problems in the world, supply can drop.
Oil Markets are based on supply and demand.
The theory is the more oil we find, the more prices drop but we never know for sure.
There are many things that affect the oil and energy sector.
There are companies that sell the finished product, like gasoline. Oil is used to manufacture many products, like plastic. There are companies that manufacture the large tools and equipment that drill and mine oil, companies that make equipment and transport oil throughout the country.
You can invest by purchasing individual stocks, specialized mutual funds, exchange traded funds (also known as ETF’s) and you can even buy the oil itself as a commodity which is traded as oil and gas.
My point is that oil and energy can play a role In your portfolio but like any other type of equity investment, you need to be careful to make an appropriate amount for your particular need and goal.
The views expressed are by Sheldon Harber and should not be considered legal or tax advice. Please see a qualified attorney or accountant for answers to specific questions.
Investors should carefully consider the investment objectives, risks, fees and expenses before investing. For this and other important information please obtain the investment company fund prospectus and disclosure documents from your Rep/Advisor. Read this information carefully before investing. Diversification and asset allocation strategies do not assure profit or protect against loss.
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