Natural Gas: Investment Tips

With increasing demand for oil and coal, people have to look forward for other alternative source to compensate the energy requirement, in such case 'Gas' often termed as 'natural gas' is the best option. It is available in plenty of amounts on the earth, especially alongside oil deposits. At present, the United States is the leading producer of natural gas in the world. Other reserves are found under the Gulf of Mexico, Canada, the Russia Federation, and the Middle East. Natural gas is widely accepted through out the world because of easy handling and transporting. Investing in natural gas means to put money in companies that earn profits from the distribution and extraction of natural gas and its end products.

Benefits of investing in natural gas:

As a result of changing demand for energy, it is clearly acceptable that natural gas will be a prime fighter in the bull market. One reason is due to its consistency in spite of changing market scenario and rising inflation. Another advantage is that natural gas is slowly moving ahead on the track for race.

Major reasons to invest in natural gas

  • Less chances of loss - Natural gas is a clear form of energy and available in plenty of amounts. Investing in natural gas is advantageous because one gets tax incentives along with a tax write off which someone doesn't get while investing in different bonds, stocks and other kinds of investment. Hence, investor is always on safer side.
  • US as a powerhouse - Because of large reserves, investment in the companies which are based in United States is more profitable. One has greater chances of returns and fewer risks.
  • Increasing demand - Due to increase in demand for natural gas in domestic market, investment in natural gas is beneficial for those who want to earn huge profits as well as reduce dependency on foreign energy supplies.
  • Higher returns on investment - Before investing in natural gas, one should get details about the company and inspect how much return will be offered on initial investment. Moreover, one should clearly study, what will be return if the investment on natural gas project proves successful.
  • Good for initial investment - One doesn't require a lot of money to invest in natural gas. The amount of money determines how much return one will get when the investment turns successful. While entering into the stock market, natural gas investment is advantageous.
  • Impact of advancement in natural gas exploration tools - As a result of improvement in geographical and drilling tools, the company can explore more natural gas and hence it can give lots of benefits to the company as well as investors.

Investment options and advantages

ETFs - Natural gas ETFs (Exchange-traded funds) is one of the safest ways of investment where one can invest in all segments such as commodity, currency, derivatives and asset. Investing in ETFs is almost equal to buying stocks where one gets a broad base rather than investing in the company.

Stocks - When prices of stocks will rise, this will definitely influence natural gas producers. In such case, one can choose those stocks that can yield more returns.

Futures - Start with much wide option, but one should remember that futures require reasonable investment and high chance of risk. A future can range from a month to 12 years however one is free to sign a new contact. Another option is to resell in the mid of contract.

Mutual Funds - In this type of investment option, one has to buy fund which covers common stocks such as natural gas producers, refineries, and distributors. Limited time for which one has to invest is 30 days.

Automobile Industries - Investing in stakes of car companies would be a best option because natural gas is predominant fuel in the auto-market.