What's Great About Investing in the Oil Industry?

There is usually a lot of talk among seasoned investors regarding the oil industry which can be very intriguing.

21:11 05 April 2019

So, if you’re looking to diversify your portfolio, or if you’re new to the stock game and you feel like you’re missing out on the oil industry, don’t worry.

In three simple points, we’ve summarized all you need to know about why investing in oil companies is considered to be so great.

1. You’ll be Benefiting from Tax Incentives

Needless to say, the oil industry is one of the biggest in the world. The main reason the Arabian gulf is so wealthy is because they have huge oil reserves. This explains why most countries are always in pursuit of oil sources; they’re always open to investments in the field. In fact, most governments actually encourage these types of investments by providing some sort of tax relief on earnings.

So, if you live in a country where oil price investing is not taxed, make sure you take advantage of that opportunity. That way, the return you earn for every share you buy will turn out be more than what you would have earned investing in a company that’s not related to the oil industry. So, in short, you can easily use the government’s tax-relief policies to make more more efficient and highly profitable investments.

2. Keeping a Stable Portfolio

Amidst the volatility of the world economy and the massive fluctuations in stock prices, you’d find that oil prices are quite stable. This makes complete sense as energy is always in demand. Oil is one of the resources that have an inelastic demand; in other words, people can’t stop using oil so, if oil prices increase, people are still going to buy it because they need it.

During economic crises when people reduce their buying and start excessive selling, stock prices usually decrease. For oil, however, they’re most likely to stay relatively stable. That’s what makes oil quite a safe investment. Your oil investments can hold your portfolio above water if your other investments are losing heavily. Not to mention, most experts recommend that you keep your portfolio diverse so that you don’t lose big in a single bad investment.

3. Making Big Wins

One of the things that characterize the oil industry is that when an oil company discovers an oil-rich well, investors start earning big money. It works like clockwork. So, not only you’ll be guaranteed stable earnings but, you’ll also be guaranteeing a huge boom in your profits every time your company breaks into a rewarding well.

So, to sum up, the reasons why the oil industry is a great investment are quite basic. First of all, oils shares are a stable type of investment with not much risk as other shares. Second, some governments like to encourage investments into certain oil companies so, they offer tax incentives for investors. Meaning, you’ll be making more net profit. Third, oil stocks go through high booms every once in a while which can prove extremely profitable for investors.