[Posted on December 17th, 2013 by Michael L. F. Slavin]
In order to invest in oil safely and minimize the risk of losing money from investments, it is important that every investor understand the importance of diversification. Although not a guarantee against loss of part or all of a portfolio, diversifying your investments and fully understanding each type of investment you enter into are two important ways to protect yourself against the loss of your hard-earned money.
A modern investor should never put all his or her money into a single type of investment. Diversification is important because of the cyclical nature of the economy. As some investments decrease in value, other types of investments will increase. Some investment vehicles, such as precious metals, are extremely volatile, and, although they can generate large returns, having too large of a share of your money tied up in volatile investments can wipe out your portfolio if the value suddenly collapses. It is also important that an investor understand the ins and outs of each investment vehicle to ensure adequate diversification. Stocks and mutual funds may sound like different things, but mutual funds are often made up of groups of single stocks, some of which may already be included in your portfolio. One of the most effective ways to diversify a portfolio is to invest in oil.
How Does Oil And Gas Well Investing Provide Diversification?
Oil and gas well investing offers some unique opportunities to investors. Oil and gas are subject to the same price fluctuations as other commodities, but these important fuels are always in demand. With the population of the world constantly increasing, demand for petroleum-based fuels and products is only going to grow in the coming decades. Investing in an oil or gas well now means that an investor is poised to reap the benefits of the higher projected future prices of oil and gas. Many types of investments are entered into for the long term, but investing in oil and gas wells puts your money to work immediately. Within just a few short months you can be receiving a monthly dividend check from your investment, rather than waiting years for a payout that may never even happen. These aspects of oil and gas investing set this type of investment apart from other investment vehicles and make it an excellent way to round out a portfolio that may contain traditional types of investments and financial products.
Are There Any Additional Benefits To Oil And Gas Well Investing?
Choosing to invest in an oil or gas well not only offers the potential of establishing a long-term income stream for you to enjoy, the investor also has the opportunity to take advantage of tax breaks that are available only to investors in oil and gas production. The entire investment can be used as a tax deduction even if the well project is not successful, and 15 percent of the dividends realized are free of any taxes. Investing in oil and gas wells is also a great way to promote American productivity and energy independence.
To find out more about the unique opportunities afforded to investors in oil and gas wells, contact the team at U.S. Emerald Energy. We have worked with numerous investors over the past two decades and will be glad to discuss our recent drilling projects, as well as how you can round out your portfolio with an income-producing oil or gas well.