Top 3 Reasons to Invest in Oil

why-invest-in-oil

There are several companies to choose in stock investing – from banks to consumer goods, conglomerates, financials, mining, etc. So this leaves you puzzled where to put your money in a vehicle that is “safe” and promising.

Personal observation. Oil is a vital mover in the global economy. Everyone needs oil. We need oil in our households (LPG tanks), cars, industries (generators, compressors) and logistics (airplanes, ships). Without oil the world economy will stop! Agree?


Oil directly affects everyone. Did you notice that a slight change of oil affects the prices of primary commodities like rice, corn, sugar, crops, etc? This is because of logistics. The higher is the oil’s price, the more expensive it is to transport and distribute to consumers!

Not only that. Here are top 3 reasons to invest in oil:

1. Easy to understand

Understanding oil is easier than any other stock options. The Law of supply and demand suffices – the greater the supply, the lesser the demand. Question is, will the demand decreases considering the growing economy?


2. Substantial returns

A change of the price of oil affects everything. Yes, everything! Ever wonder why there’s always inflation? Hence, investing in oil is likely to be a safe haven considering the price hike from time to time.

3. Most Important Commodity

Oil is the price dictator. Once it rises, all the other sectors will follow. And with the increasing demand of oil all over the world, what would be the effect? And not only that, only few countries are exporting oil!


Middle East countries are the biggest oil suppliers. The rest of the countries are just relying on these suppliers for consumption. Now, does this sound convincing to you?

Conclusion

Though oil companies are my first priority in stock investing, I am not placing all my eggs on this. Yes, the rewards are big when you invest in oil. But this is not an exception to the rule of Risk and Reward – the more rewards you receive, the riskier it is. So the question is, is it worth the risk?

No comments:

Powered by Blogger.