Steps to determine if oil is a good investment for your portfolio

Written By Steps To Faculty Published May 20th, 2010

The question of whether or not oil is a good additional investment for your portfolio has been in many in the minds of many investors and the general public for quite some time. And if your portfolio needs diversification, considering the energy sector may be the way to go. Investment in the energy sector recently has been recommended by professional financiers and financial planners as a safe alternative.

Energy ETFs are the correct choice to invest if you select this route. And even if there is general inflation risk, you can get the benefit of energy ETFs. The following are the reasons why energy ETFs can be considered for your portfolio.

Step 1 Expose your portfolio

Investing in the oil industry can give your portfolio access to many oil companies to diversify your principal investment with just one trade. Oil ETF can add oil stocks to your portfolio easily.

Step 2 Protect your portfolio

If you have a portfolio that has lots of energy companies or commodities, energy ETF can provide protection from downside. How? By investing in an ETF, you invest in several companies at once and at the same time, you can benefit from investment in the oil industry as a whole, rather than just depend upon the prosperity of a single oil firm.

Step 3 Energy ETFs

Energy ETFs can help you to hedge inflation risk. If there is inflation risk, you can easily manage this risk. How? As oil prices rise, so does the value of your investment. Thus you do not lose portfolio value due to inflation or even business risk

Therefore, oil is a good investment for your portfolio and can give profit to you investment. Oil is more valuable than natural gas and less expensive to access. So, before you go about determining whether investing in oil, remember that it adds a value in your portfolio. It is up to you now to determine if the oil is a good investment for you.

Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.