Investing In Energy Funds
Topics: Oil prices, cash flow, Sport Utility Vehicle, gas mileage, energy, stocks, bonds, mutual funds, oil
It’s hard to believe with oil approaching $100 per barrel, but the U.S. will consume over 1 billion (that’s 1,000,000,000) more gallons of gasoline in 2007 than in 2006.
As a certain President once said, we are energy junkies. We keep craving more regardless of the price. Ask yourself this: Are you plugging more stuff into the wall each year? That requires even more oil, natural gas or coal.
China, India and the other new economies also consume more energy each year. Political instability in Nigeria, Iran, and Venezuela could limit supply. And, there’s only so much oil (natural gas and coal) in the ground. I’m not suggesting we’ll run out but it will become more expensive to extract it.
How can you ease the pain every time you fill up? Or better, how can you benefit from higher energy prices? By investing in energy companies. There are two ways to do this. You can buy a Natural Resources sector fund or you can buy a Value fund which holds energy stocks. The sector mutual fund is the “pure play.”
It holds energy stocks and, probably, stocks of minerals i.e., iron ore and copper, mining companies. The risk with a sector fund is that there aren’t a lot of them to choose from and they aren’t diversified. Don’t get me wrong. A sector fund is diversified within its focus area, i.e., owns a number of energy and mining companies, but any fund which investors in only one part of the economy is inherently riskier then a broadly diversified mutual fund.
The other way to “play energy” is through a large cap or mid cap value fund. These funds typically have some energy exposure. The downside of this approach is that value mutual funds have only a portion of their assets invested in energy stocks.
With either a Natural Resource fund or a Value fund (or any fund, for that matter), don’t just go by the name. Different fund managers view and approach their mandates differently. Drill down (no pun intended) and check the fund’s holdings to see if they match your expectations.
You can do this by going to the fund’s website for a complete list of its holdings. Lists of the top rated Natural Resource and Value funds can be found on websites such as Morningstar, Lipper, Value Line and MUTUALdecision.
Your broker, Schwab is a good example, also may have this information on line. The larger fund families such as Fidelity, T. Rowe Price and Vanguard all have Natural Resource and Value funds and may have information on others, as well.
Which investing approach is right for you? It depends upon how much risk you’re willing to take and how your other assets are invested (think diversification of your entire portfolio). Having an energy investment might ease the pain the next time you fill up.
Bill Byrnes is a co-founder of MUTUALdecision (www.mutualdecision.com) A former investment banker and finance professor, he has been CEO, chairman and served on the boards of a number of public companies. Bill is a CFA with over 30 years investment experience.
Previous Articles Highlighter:
Options Trading: The Protective Put Strategy In Different Scenarios (1)
Above $32.00 the position will gain the amount equal to the stock price minus the premium paid for the option.. In the 'stagnant' scenario, the position will produce a loss.
Holiday Insurance - A Price You Cannot Afford To Save (2)
So you have to do some inquiries first about the coverage of the insurance you are buying. Also when choosing the right one for you, make sure to do a lot of research and inquiries so that you would make the right choice.
What Are Credit-Based Auto Insurance Scores? (3)
The exact type of information that is used to determine your insurance score will vary from company to insurance company. Some may not use your past job history or your current income as factors, while others may decide to use that information.
Student Loans Will Fund Your College Career (4)
This is where student loan consolidation lenders come in. When you consolidate, you put together the variety of student loans you have accumulated during your college years, into just one loan only.
Your Health Insurance Plan - What You Need To Know (5)
You are going to get several quotes now, aren't you! The ones responsible for the administration of the healthcare benefits specified by the health cover might be government agencies, non-profit entities or, most often other private agencies that operate a health plan to make a profit at their end.
Grants! Do I Qualify? (6)
They often come as a package with additional business advice and support which can prove as important as the cash. Your local Business Link should be able to point you in the direction of relevant grant schemes and many business support organisations subscribe to a grants database.
Student Loans - Consolidation Can Change Your Life, Literally! (7)
It's just that those parents will have to consolidate the student loans they borrowed separately from the loans borrowed by their child. Take note also that students who are married usually cannot consolidate together their student loans now, unlike before.
Your Dental Health Insurance Plans - What You Need To Know (8)
So preventing things from decay and other problems is still the best way to go. Along with prevention, you must also have a back up plan in case your dental health does fail.
Choosing A No Annual Fee Credit Card (9)
The contract often includes the crucial elements about your credit agreement, including any additional fees you may otherwise not be aware of. Institutions also update these agreements from time to time and send the new copy with your bill.
What's The Process For Fixing Mistakes On Your Credit Report? (10)
Topics: student loan debt, credit application, online credit cards Perhaps you have found something on your credit card that you do not believe belongs there. You want to do something about it, but you are not sure just what that something is.
Do You Know What A Credit Reporting Agency Is? (11)
These are the three that are most reliable when you want to get a copy of your credit report safely, without risk of identity theft or other forms of fraud.
First Steps To Understanding The Bankruptcy Code (12)
So be responsible and spend less than you make. They will be allowed to file for bankruptcy only if these people have fulfilled a counseling session. This step has been taken to hold that the bankruptcy code is not being misused by the assorted individuals who want to avoid paying their various debts.
Learning The Difference Between Legitimate Loans And Loan Schemes? (13)
This is not the same thing as collateral. Legitimate banks will most likely not ask you for a deposit, and anyone who does should no longer be on your list of possible lenders, because in most cases, these are they who will take that deposit and run.
When Is An Installment Loan The Right Choice? (14)
There are several types of loans, and yes, some are better than others, depending on what you buy and the circumstances in which you buy it. One type of loan is called an installment loan, which is the most commonly used form of loan among society today.
Do You Even Know What You're Credit Score Is? (15)
Credit card companies, possible employers, and loan officers look at your credit score to see how much they can trust you to pay back the money that you may be asking to borrow.
Your Credit Report - Seven Years Later (16)
Topics: student loans, auto loans, personal loans Sometimes we get caught up in the illusion that it is okay to let our credit payments go late sometimes. Sure, the interest rates go up, and you will probably have a harder time paying next month's bill because of it, but hey, right now, you have no worries, right?
How Do You Know If Someone Has Used Your Credit To Obtain A Loan? (17)
When you think you are having trouble with identity theft, there are a few things you can do to ensure that it does not go any further than it already has.
If You're Upside Down In A Car Loan, How Can You Get Out Of It? (18)
Combining your car loans into one monthly payment can eliminate a lot of stress and allow car owners to purchase other vehicles. This option can be accomplished by contacting a financial advisor and together organizing a specific plan that works out best for you.
What Do I Do If I Earn Too Much To Qualify For Student Loans? (19)
You can search for these on-line, at the library, or through your financial aid adviser. In addition to thousands of college funding consultants around the country who can guide you through the maze of financial aid options, there are also other ways to identify college bargains.
How Much Does A Kid Need To Save In Order To Be Ready For College? (20)
Author Mark Kantrowitz, creator of a widely acclaimed Web site, interprets the one third rule this way: "you should expect to save one-third of the anticipated college costs, pay one-third from current income and financial aid during the college years.
Newer Articles Highlighter:
How To Asses Bankruptcy Petition Cost (1)
All you need to do is just to keep in mind the following factors. Filing Fee The filing fee for bankruptcy has increased substantially in the last few years.
Will My Credit History Affect My Student Loan Situation? (2)
This kind of scenario can be applied to any type of loan that most people want to get, including the ones for students. Student loans are often considered as easy and simple to acquire, but the process of applying for them too can become complicated with a bad credit history.
Save Money On Groceries (3)
Grow it Yourself If you have the space, the most cost effective way to reduce your healthy food grocery bill is to grow/raise some food yourself. Victory gardens, herb gardens, fruit trees, chickens and even rabbits can be raised in a small location without a huge investment of money or time.
Disputing Errors On Your Credit Report Can Save Your Score (4)
But how exactly does one go about fixing something on their credit report, how long will it take, and do people really meet with success in matters like these, or is it just an exercise in futility?
Tips On Refinancing Your Car Loan The Right Way (5)
There are options available within this process, however, that would help facilitate and simplify the loan payment process. Unfortunately in the financial world today there exist quite a few customers who simply overspend their money in their necessary auto loan payments and who should otherwise be spending less money toward their car.
Can You Improve Your Credit Score By Paying Off Debts In Collections? (6)
There is always a way for people to redeem themselves financially but the process takes a lot of time, hard work, and patience. According to many financial experts, the most important way to start increasing your credit score again is by earning enough income to pay off the collections that were taken by the lending company.
How Do Borrowers With Bad Credit Get Car Loans? (7)
This can be accomplished by using credit cards and making the necessary payments on time. Building up credit can go as fast as you use a credit card. Court helps people to learn about how to find low interest credit card offers.
5 Great Reasons To Buy A Polaris World Property (8)
Located close to the beaches of the Mar Menor and Mazarron, it offers you an opportunity to enjoy the Mediterranean vegetation of Murcia, with olive trees, palm trees and citrus fruit trees.
How Do You Know When You're Dealing With A Good Mortgage Lender? (9)
Probably the largest money problem arrives when customers have to maintain big loans that are called mortgages. Mortgages can be somewhat complicated and overwhelming, especially if you do not have much experience in working with such financial affairs.
Is It Wiser To Open A Home Equity Line Of Credit Or Get A Second Mortgage? (10)
The other type of loan, a home equity line of credit, is not too different from a second mortgage, except that it works like a credit card and only makes you pay according to your credit history and credit limit.
Don't Make These Common Auto Loan Mistakes (11)
A person who is interested in a potential loan should look at all the details of several auto loan options and then compare them to see which loan would work out best for you financially.
Advice On Getting Your Student Loan Interest Rate Reduced (12)
As such financial stresses ultimately come after the student has earned the desired degree, he or she must decide how to best settle the debts and how to go about paying off the loans.
If I Don't Pay My Doctor Bills, Will It Hurt My Credit Score? (13)
Some people ask if medical bills are counted toward a person's credit history, and the answer is a definite yes. Many customers have questions with regards to how a person's privacy is protected from medical bills being on credit histories, but these are easily answered.
Is There Any Way To Improve Your Credit Without Actually Paying Off Your Judgments? (14)
This credit judgment is like a major black mark on a person's credit history and will stay their until the person is able to pay off the amount of the collection.
What's The Better Choice - Take A Bigger Loan Or Make A Bigger Down Payment? (15)
Even though there exist so many various types of monetary techniques and methods, there are some of these skills that work very well and bring about a lot of success for their users.
Want To Get A Mortgage? You Need To Improve Your Credit (16)
Using credit cards will not only improve your credit score but also provide great rewards in the process. When processing mundane and small purchases, customers often use bills or checking account cards, which is a safe yet unrewarding way to increase personal benefits.
A Simple Online Forex Trading Guide (17)
The services offered through online forex trading are very user friendly and simple to use. You will not need to be an expert to find your way through the system.
Mortgage Refinancing Scams - Dangerous Waters (18)
You might be faced with having a lower monthly payment installed because you will only repay the interest each month. This means that at the end of the loan period you will also have to give back the entire principle, referred to as a balloon payment.
A Guide To Desiphering Forex Quotes (19)
The first part of the quote lets the forex trader know which currency is involved. The nation listed first is referred to as the base currency. This means the trader currently holds that currency and he is using it to buy the quote currency, sometimes called the trade currency.
What You Should Know About The Option ARM Mortgage (20)
It is smart on your part to shop around and bargain. That is the way mortgages work. New Jersey Mortgage at www.firstatlanticmortgageservices.com gets you a COSI loan at www.firstatlanticmortgageservices.com and an Option ARM Mortgage at www.firstatlanticmortgageservices.com