A wise money manager knows that a good way to grow money is through investments.
Most of the investment schemes that we know of have benefits, risks, and misconceptions to boot. The oil price investment scheme is not an exception nor is it a stranger to the common misconnections. Oil is just one of the commodities that can be invested upon and is thus categorized under commodities investment or commodities futures investments.
Misconceptions are not helpful, especially for those who start an investment or are interested in a certain type of investment. Even established investors can get swayed by misconceptions and make costly investment mistakes as a result.
To dispel negative connotations and incorrect ideas about oil price investment, we will revisit the common misconceptions regarding oil price investment and disprove the misconceptions. There are many misconceptions about oil price investment but they can be stuffed into a single category. The paragraphs below will talk about the common misconceptions.
Oil Price Investment is Too Risky
Going back, almost all investment types have accompanying risks. Although oil price and commodities have fluctuating prices (volatile) and are unpredictable when traded, careful observation, patience, and calculated decision-making can still make oil price investment lucrative. If you are not afraid to take risks and could patiently wait for that big break, then you can go for this investment.
Taxes Can Kill Your Oil Price Investment
Another common misconception is that oil price investing can be crippled by taxes. While it’s true that taxes can be applied to investments depending on their type of income, these taxes are tailored so as not to deprive investors of their much-needed income. Oil investing isn't exempted from tax, but it has some various tax advantages due to the high risk involved. For potential or novice investors, this can be an attractive feature for an investment.
Oil Price Investment has an Uncertain Future
News of fast-tracked research on alternative forms of energy and discontinuation of oil and fossil fuel usage due to global warming have stoked the fire of this already burning misconception. Since the dawn of the first alternative energy source, there has already been a bit of speculation about the future of investing in oil or oil prices. Nevertheless, despite the rising popularity of alternative energy, innovations on “clean” and environment-friendly ways of extracting and utilizing oil and gas are also emerging, thus keeping their footing solid in the competition for “green” energy.
Peak Oil and Gulf Supply Decline
Speculations and misconceptions about peak oil – peak in global oil production and its eventual decline – and the news about the possible disbandment or dissolution of OPEC can strike unnecessary fear into the hearts of potential oil price investors and even current investors. Always keep in mind to investigate and weigh the facts before jumping into conclusions and making bad decisions. We’re still seeing a steady supply and usage of oil and fuel products and the emergence of new oil producers, so everything is pretty much stable for the moment.
Oil Price Investment is Expensive
A lot of people think that oil price investment and commodities investments for that matter require a lot of money and thus, avoid venturing into it. Actually, the competitiveness of the current market as well as the availability of many oil and gas companies has allowed a relatively affordable startup requirement for oil price investment.
Nobody Makes Money in Oil Price Investment
True, losing money is one of the risks you take when trading in oil price or commodities, but the other prospect is also gaining money from it. This could be a common complaint from ill-prepared investors and those that did not employ effective investment strategies. The good thing about oil price investment and other commodities investments is that they are zero-sum, which means that for every lost dollar, someone gains a dollar. All you need to do is be wise in making trade decisions and you’ll be most often on the gaining side.
Trading or investing in oil price is never easy and is fraught with misconceptions. Remember to invest wisely by doing research, making sound calculations and strategizing your investment. The bottom line is to make good investment decisions and not make bad ones stemming from misconceptions and speculations. So invest now, and invest wisely.