There are many ways to invest in the resource sector such as buying mutual funds weighted towards this sector, investing in futures, buying oil and gas stocks in an existing resource company or even buying your own well. While each one of these vehicles are in the energy sector, they are considerably different and anyone interested in investing would be strongly advised to seek education on the vehicle that interests them most.
Fossil fuels such as oil and natural gas are the single most widespread form of energy currently in use on our planet. Whether it is the gasoline that you burn in your car, the natural gas that is used to heat your home or the variety of petroleum products that you see around you (almost every form of plastic or synthetic material in use today), chances are that fossil fuels were used as a raw material or in the manufacturing process. For this reason alone, many investors believe that investment in the resource industry is a good idea.
For the many people interested in investing in the resource sector, oil and gas stocks are considered the most accessible vehicle to invest in. Not everyone wants to (or would even know how for that matter!) go and purchase their own oil company or oil well. Some investors have not been satisfied with the returns they have realized in mutual funds either so once again, shares are certainly an option.
As with any opportunity, investing in the stock market requires some education and analysis. Researching the companies that you would like to invest in is a critical aspect of any decision. Questions such as where to these companies have currently their holdings for example are important. A company that has holdings in North America for example would be considered less risky than another region that is less politically stable.
Another item to consider when investing in oil and gas stocks would be trying to focus on a more specific area within the resource sector. For example, you could invest in shares of an existing service company, a drilling and exploration company, a company that owns oil and gas pipelines, refineries, etc. There are many segments to the resource industry so choosing one of these segments may also help to refine your investment.
Regardless of which segment you choose, research is another key component to investing or choosing an oil and gas stock. There are many online tools available for analysis and many are available through the more popular search engines. Another simple and easy way to gather research is by reading the business section of your local newspaper. By focusing on the articles on the energy sector, it is amazing how much one can learn about the industry overall in a short period of time.
If you are indeed interested in purchasing resource shares, another decision that would need to be made is exactly how you will make the purchase. Will you use an existing brokerage firm, an online brokerage account. There are several options available and this is another thing that would need to be researched in order to determine what is right for you.
Because of the global demand for petroleum products, many still believe that investing in oil and gas stocks is the right thing to do. As with all investments, there is definitely an element of risk and certainly the absolute best way to mitigate risk is through education, knowledge and professional advice.