How to Buy Energy Mutual Funds
Buying energy stocks has the potential to be quite lucrative. How you go about choosing which to buy is the real question many investors wrestle with, but that doesn't mean you should turn your back on them. For a little advice, consider the following steps.
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Instructions
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First, you need an online trading account, such as with a discount broker like TD Ameritrade, which will give you access to several types of mutual funds and investment options. You want to be able to hold cash, certificates of deposit, mutual funds and even individual stocks. Make sure your discount broker offers no-load mutual funds. You want to be paying as little in commissions and management expenses as possible.
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So as soon as you have your online trading account set up you can deposit some cash and start your research. Morningstar.com offers some good free research and your trading account should also have a research section where you can start tracking some of the funds you are interested in. There are several types of mutual funds to follow including equity, bond, dividend, balanced and the specialty funds like technology, resources, precious metals and energy, to name a few. Try to minimize the number of mutual funds you are following or you will get lost in all the data.
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Choose an energy mutual fund that has a good 10-, 5- and one-year gain. You can nibble your way into investing in an energy mutual fund by buying the minimum $100 whenever you see the price of oil dropping. If the economy gets especially bad and the price of oil dives dramatically, you can use this as an opportunity to buy more. Remember that you should only be investing money that you can afford to lose. That means that all of your obligations for mortgage payments, credit card payments, food and insurance are all taken care of before you invest a single penny.
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What about green energy, such as solar, wind and geothermal? Well, the "old-tech" energy companies that dig for oil are also turning to these newer technologies and investing in solar, wind and other alternative energy sources. Follow the news for investing tips. Which companies are doing this? Are any of those companies held in your energy mutual fund? Is there a fund that invests in these green energy companies? If the economy is ever to recover, one thing always needed is energy. Do your research, start small and always make sure you pay your debts before you invest a single penny.
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Tips & Warnings
An added bonus of investing in an energy mutual fund is that you will learn a lot about the cost of energy.
Do your own research and be careful when investing with mutual funds as you can lose everything. Always pay off your debts and make sure you have a rainy day fund before investing any of your money in stocks or mutual funds.
References
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