[Posted on February 24th, 2015 by Michael L. F. Slavin]
Investor.gov, a branch of the U.S. Securities and Exchange Commission, discusses several investment opportunities that are appropriate for beginners. Many people are left wondering, how to purchase bonds or how to invest in oil. As the website points out, no one can promise that you will make money on your investments. However, you increase your chances significantly if you conduct solid research and create an investment strategy.
How to Invest in Oil
If you want a diverse investment portfolio, consider learning how to invest in oil. It’s a necessary product with a proven high return on investment. You stand the greatest chance of success by working with a private oil investment company that can advise you on the best wells to invest your money into. This is an excellent way for new investors to earn monthly residual income. Because oil is a scarce resource, prices have historically trended upward.
When you invest in oil with a private oil investment company, you and the company essentially become joint venture partners. The oil investment company does the difficult work of locating profitable wells and drilling for oil. This requires special equipment as the wells must be drilled thousands of feet deep to reach usable oil reserves. The cost of drilling is usually prohibitive, especially for new investors. A joint venture allows you to invest in oil without the large expense. While you still have some risk, more of the burden for it falls on the organization doing the drilling.
Investing in Bonds
A bond may sound official, but in reality, it is little more than a professional IOU. When individuals or businesses need to raise money, they make an offer to investors to purchase one or more bonds. The principal value of the bond is its face value and the borrower issues it to you for a specified period. When the bond matures, the borrower agrees to repay you the face value plus interest.
Bonds are a low-risk investment opportunity for beginners because they tend to pay twice annually on a predictable schedule. Options for purchasing bonds include corporate bonds, municipal bonds, and U.S. Treasuries. You must consider the borrower’s credit worthiness and account for inflation before deciding to invest in bonds.
Real Estate Investment Options
If you are interested in investing in real estate but don’t want the risk of purchasing a property on your own, a Real Estate Investment Trust (REIT) may be the right investment for you. REIT is the name given to companies that own commercial real estate or related assets that produces income for the organization. Examples of properties that may be owned by a REIT include apartment buildings, hotels, storage facilities, office buildings, and shopping malls. While most individuals and businesses purchase real estate with the intention of reselling it, a business operating as a REIT buys properties to earn income and keep as part of an investment portfolio.
This investment opportunity is somewhat advanced for a beginner, so be sure to speak to a financial advisor before undertaking it. You may also wish to consider purchasing a house for resale or renting it out for a reliable monthly income. With the latter option, be certain to vet your prospective tenants carefully to avoid the legal hassles that come with having to evict someone.
Whichever way you plan on beginning your portfolio, consider contacting reputable leaders in the industry you’re most attracted to. Companies which specialize in real estate or oil investing can help you to navigate the uncertain waters and lead you to the best investments of the upcoming year.