Once you know how to invest in oil, you can diversify your portfolio with oil commodities. There are several ways to go about investing in oil, depending on how you want your investment to perform and how much risk you think you can handle.
Buy Stock In An Oil Company
You can purchase stock in an oil company, just as you would for any other publicly traded business. The oil business has many different facets, from exploratory drilling to refineries to distributors. Do research on the type of company that best fits your investment needs, and be aware of how the rise and fall of oil production affects your investment. If you use a brokerage account, it's easy to purchase stock in the US Oil Fund (USO), which tracks the price of oil. Or, focus on certain oil companies with recognizable names, like Shell. There's inherently more risk in choosing to place your investment with a smaller oil company, but the return could be much bigger.
Invest In An Oil ETF
Another way to invest in oil is to put your money in an ETF. An ETF is an exchange-traded fund that encompasses many different parts of the oil industry. Because the investments are spread out among a variety of oil-related businesses, the investments are lower risk, as you are not putting all your money with the stocks of a single oil company. However, some oil ETFs can specialize in just a certain segment of the oil industry, so research the ETF to see whether or not it is truly diversified, and keep in mind that all investments involve a certain amount of risk.
Invest In Oil Futures
Finally, you can invest in oil by turning to the futures market, but this is not for amateur investors. You'll need to pay cash up front, and you need to be willing to devote the time to monitoring your investments. As anyone who watches the news regularly will tell you, oil prices are volatile, so you need to be able to handle risk. If you are intrigued by oil but don't want to take a roller-coaster ride, you may want to stick with an ETF.
 | Crude oil is formed as part of the earth's natural processes, and it must be extracted from deep in the ground and refined into fuel and other products that humans can use. |
 | Crude oil refining relies on extracting impurities and heating up the oil, which results in different types of fuel, including gasoline and kerosene. |
Who discovered oil? No, it wasn't Jed Clampett. Oil has been around since the ancient times, but it wasn't until more recently that people drilled for it. |
Find articles about crude oil formed, who discovered oil, crude oil refining and how to invest in oil. |
