Investing in Oil in 2011 has been considered by many investors at the start of the year. Especially with the Egypt protests and a possible crisis in the Suez canal. But is investing in oil so early in the year a wise decision?
But smart investment starts right back with the proper research. There is no point investing in oil and lumping money on any stocks. Especially with the way the economy is at the moment. There are many influential matters that can affect oil drastically. That is why one must be careful about investing in oil in 2011.
Before investing, make sure you the price ration of your stock is high. Also research and investigate the future projections the company is making in 2011. You must decide if you want to take a trust unit or you just want to purchase a common share listed on the New York Stock Exchange. Investing in oil can be very rewarding, but remember that tax needs to be taken out of your winnings. So there are different tax thresholds on both common shares and unit trusts.
Also if you are playing on the futures market you have the combination of choosing between, Brent crude oil, natural gas or crude oil. Even though these sound the same, they are different and trade differently. With prices so high at the moment, it might be worth your while to buy dips, if they occur. The Egyptian crisis has sent crude prices sky high. So it might be wise to wait for the protesting in the middle east before investing in oil. Sell offs in oil always occur as such crisis's cool down.
Before you go investing in oil in 2011, make sure you sit down with your financial advisor and work a plan that suites you and your portfolio size. If their are more middle east crisis's oil will move dramatically, so make sure you know the risks involved and are constantly managing your portfolio as the year progresses.