How to Buy Energy Mutual Funds

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By offgrid
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Oil and Gas

If we are heading out of the recession and a recovery is on the horizon it means that eventually business will pick up, people will start shopping again and we will start needing more energy. So if that is what we are headed for maybe it's a good time to start looking at investing in Energy stocks. But how do you choose a single company to invest with ? That is difficult. But is it too difficult to stay away from investing in Energy ? Not with a good Energy Mutual Fund.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

Online Discount broker
$ 100 or more

Step 1

So, investing in an Energy Mutual Fund. Where do you start. First of all you need an online Trading Account. I recommend a Discount Broker, like TD Ameritrade or something like that. Why ? You want options and an Online Trading Account 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.
Step 2

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 really good Free research, and your Online 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. 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.
Step 3

Choose an Energy Mutual Fund that has a good 10 year, 5 year and 1 year gain. You will notice than many will have a negative 1 year return. That's because Oil was at a record high around $148/barrel last summer and Oil has dropped into the $30's and rebounded back to about $60/barrel. So where is oil headed ? Your guess is as good as mine, but if you watch the news and there are indicators that the economy is improving, it's a good guess that oil will march higher. If the recession is going to drag on for years and years that is an opportunity to buy Energy Mutual funds at lower prices. And for a long term investor that's a good thing.
Step 4

So as you track the recovering economy, also keep track of the price of oil/barrel. 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 News on 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, insurance are all taken care of before you invest a single penny.
Step 5

What about all this talk of Green Energy ? Solar, Wind, Geothermal. Well these 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. 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 we will always need is energy. Do your research, start small and always make sure you pay your debts before you invest a single penny.

How to Buy Energy Mutual Funds

Things You'll Need:

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