How to Invest in Oil Stocks
Oil is a commodity in great demand worldwide. Here in America, we use oil to power our homes, cars, lawn mowers, motorcycles and most other equipments we use daily. To get oil from producing countries to our shore, we rely on oil companies. These companies issue stocks that trade in the various stock exchanges throughout the world. You can invest in these oil companies by buying their stocks.
Other People Are Reading
Instructions
-
-
1
Research the various oil companies and understand who the main players are. Find out which oil companies are making profits and which ones are not. Know who runs these companies and research their business history. Research the regions these oil companies import their crude from and understand the geo-political situation in those regions.
-
2
Select the top companies in the oil sector and research their balance sheet for the past five years or more. Note the companies that pay dividends have higher Return on Investment (ROI), are leaders in their groups, less volatile and have great before-and-after-tax profits.
-
-
3
Research stock brokerage companies. Consider their trading commissions, annual fees, time of execution and other fees. Open and fund a stock trading account with the brokerage of your choice.
-
4
Buy stocks of oil companies in the open market. Log on to your stock trading account and following instructions from your broker, buy the stocks of the oil companies directly in the open market.
-
5
Buy oil stocks through mutual funds. Research top performing mutual funds through ratings sites like Morningstar and buy oil company stocks through energy and oil services focused mutual funds. See Resources below for additional information.
-
6
Buy oil stocks through Exchange Traded Funds (ETFs) which issue large blocks of shares for purchase. This allows you to leverage your investment and minimize your risks at the same time. Research ETFs through the United States Security and Exchange Commission’s website. See Resources below for additional information.
-
7
Buy the stocks of oil companies directly from the companies. Some oil companies make their shares available for direct purchase in smaller quantities. Research and contact these companies to buy shares.
-
1
Tips & Warnings
Buying stocks is risky. Be careful before investing your money in stocks. Monitor your stocks regularly and sell when you begin losing money.
Unless you know how the stock market works, you shouldn’t buy individual stocks. Buy oil company stocks through ETFs or mutual funds instead. This helps minimize your risk.
