If you are looking for an investment that will stick around and protect against inflation, try investing in a commodity. One very powerful and highly lucrative commodity is energy. Homes and businesses, cars and other transportation products, and many other life needs are powered by energy.
Energy will never go away and there are so many ways to invest in this sector, whether you want to invest in oil directly or invest in companies dedicated to clean energy, you can make an impact in the world’s energy production and make yourself some hefty money.
Before exploring the world of energy, let’s see why you should be thinking about commodities as your next investment. Through oil, natural gas, renewable energy, and more, you can earn great returns and make an impact on energy around the world.
Investing in Commodities
Commodity investing involves putting your money into raw materials that are either consumed directly, like food, or used to create other products, like precious metals. Energy sources and natural resources like are considered commodities.
Interested investors can invest in commodities in many different ways, like in physical raw form or using future contracts of ETPs that track a commodity index. Mutual funds are also a viable way to invest in commodities. Buying shares of a company that profits from the value of a natural resource is a great way to invest in a commodity.
Commodities can be utilized for diversification, to hedge against inflation, gain returns, and more.
Why Invest in Energy?
Energy is one of the largest and most valuable markets today at around $7 trillion globally. In 2016, oil companies produced 96 million barrels of crude oil a day around the world. At around $50 per barrel, that’s more than $1.7 trillion dollars in crude oil alone. That’s more than metal and mining combined. This is before adding in other energy such as natural gas, coal, and electricity.
The energy sector is so large, making for endless opportunities to invest, ranging from oil and gas companies to renewable power providers. The size of the market is one of the biggest draws to the sector.
Another draw is the future growth of energy. The International Energy Agency predicts the sector will increase by more than 30% by 2035, thanks to growing nations like China, India, and the Middle East. These countries are set to account for two-thirds of that growth.
The future isn’t the only reason people are investing in energy. Recent returns are also very appealing. For decades, investments in the energy sector have provided higher than average returns. ExxonMobil returned 140% between 2003 and 2017.
There are so many avenues to choose from, whether it’s the highly popular crude oil or electricity, solar power, or wind energy. The market is so big that you can even diversify your energy investments. Other energy outlets include gas, coal, nuclear energy, and biofuels.
Where to Invest
Like just stated, there are many different choices for your energy investment. Let’s dive a little deeper into some of the options.
Like water, oil is a highly necessary commodity for sustaining human life. Because of supply and demand, gasoline prices are high and continue to rise. With growth in large countries, like China, world demand for oil sits around 100 million barrels a day.
Oil need goes beyond gasoline. Many plastics, medicines, linoleum, shingles, cosmetics, and many more products, are made from petroleum.
In 2018, the renewable energy sector reached a milestone, hitting 1 terawatt of energy. Through solar and wind energy, the global capacity was hit and the next terawatt won’t be far away. It’s predicted by Bloomberg New Energy Finance that the second terawatt will be reached in 2023 at 46% less expensive.
Renewable energy is growing in acceptance and diversity. Investment opportunities are expanding beyond solar panels and wind turbine manufacturers.
Through an investment in coal or nuclear power, you can make an impact in electricity production. You can also invest directly in the power industry by way of electricity futures or electrical utilities.
Electrical utilities are companies that provide electricity to homes around the world. Families and businesses everywhere need electricity to live, making this investment opportunity lucrative promising high returns.
As a major source of power generation, used to power gas turbines, create steam power, and used within heating and cooling systems, natural gas is a popular investment.
How to Invest in Energy
There are a few different routes to invest in commodities like energy including futures, stocks, ETFs, and mutual and index funds. There are many commodity exchanges all over the globe, some of which carry multiple commodities, while others specialize in a single material.
Alpen Partners and Commodities
Alpen Partners Wealth Management International AG, the sister company of Alpen Partners AG, is now a registered investment advisor at the U.S. Securities and Exchange Commission (SEC). Together with our partner Swiss private banks, our company can now offer the full Swiss private banking experience to American clients, both resident and non-resident.
In order to be an SEC-registered advisor, Alpen Partners had to register with the Securities and Exchange Commission (SEC) as an investment advisor. We had to pass an exam on uniform investment advisor law that covers federal securities laws and other topics related to investment advising.
If you are interested in investing in other commodities, read this article where you can discover what other commodities can make an impact on your portfolio. In terms of precious metals, Alpen Partners has connections with some of the most prestigious banks in Switzerland that have trustworthy reputations for managing wealth and holding your gold.
Connect with us if you have any questions about gold as an investment or need a bank to hold your gold. If you wanted to explore the power of investing in water, Alpen Partners has developed an extensive network of specialists focusing on the theme of water investing. Our goal is to find the best investment opportunity for you, whether it’s in water or otherwise.
No matter the problem, Alpen Partners will handcraft a solution for you. We know that there is no one-size-fits-all when it comes to financial success. Our approach involves working with our clients to make a unique plan to meet their needs. Rest assured that we will work hard to guide you through the process of meeting your financial and personal goals.
Contact us to enhance your financial plan today.