Energy is always in demand. That’s why the energy sector is a smart investment buy. Here are 9 smart reasons to invest in the energy industry.
The U.S Energy Information Administration projects that global energy usage will increase by 28% by the year 2040.
That, in part, is one of the reasons why people are looking to diversify their investment portfolio by putting their money into energy. Energy is a utility that is essential to the lives of just about everyone in modern society.
It keeps temperatures comfortable indoors. It keeps food fresh. It powers life preserving support for thousands of people managing medical conditions. You get the picture
In case you’re not already sold on the value energy industry investments can bring to your portfolio, here are 9 reasons why energy presents a tremendous opportunity to investors like you.
- Skyrocketing Demand
As I alluded to in the intro of this article, the global demand for energy is going way up. This is due in no small part to the growth of third world countries and their recent adoption of appliances that have been common in first world societies for decades.
As third world populations start to put more stress on the energy grid, companies that create the infrastructures required to meet energy demand will see massive revenue increases and will provide a tremendous return on investment to investors.
- The Energy Industry is Diverse
When you think about investing in energy, you can’t just think of it as investing in any single thing.
The energy industry is broad. That means that investments within it can mean investing in companies that drill oil, companies that put up electric polls, mine coal and do a variety of other things.
That diversity within the industry means more security for your portfolio.
- Energy Has Proven Worth
The energy industry is worth 7 trillion dollars globally. That makes it one of the most powerful industries on the face of the planet.
Also, if you look at the top 10 highest grossing companies on earth right now, 6 out of 10 operate in the energy sector. If that doesn’t reassure you of the worth energy brings to people who invest in it, I’m not sure anything will.
- Energy Companies Outpace the Market
Many people invest in the S&P 500 to try and get stable and favorable returns from their investments. While the stability of index funds is worth noting, even more impressive is how energy stocks outpace S&P growth.
For example, looking at Exxon, the company has grown by 140% from 2003 to 2013. Compare that to the 40% growth the DOW Jones’ enjoyed during the same time period.
- Government Investment
There’s no customer better than a country’s government and it’s unavoidable that governments all across the globe are going to need to make massive energy purchases.
Given the increased demand in both the United States and abroad, new infrastructure projects are set to take place both in green and traditional energy. Making sizable investments in the right kind of companies can mean exceptional profits.
For help selecting the most viable energy-related stocks, consider reading advice from energy trading experts like Dr Kent Moors.
- Connections to Everyday Life
The energy industry makes for a great investment because you leverage many of its facets every day. From electricity to gas and beyond.
This intimate relationship with energy is a good thing for two reasons.
First, your deep understanding of what kinds of energy bring the most value to people’s lives allow you to make educated investments in certain companies. Second, as you start to study things like the rise and fall of crude oil futures, you’ll be able to get out ahead of things like gas price increases.
- Create a Better World
If you care about your planet, energy investments need your support more than ever. With global warming affecting areas all over the world, people like you investing in companies that aim to bring solar and wind power into mass adoption are essential.
Imagine being able to make returns on your investments that outpace the market and simultaneously create a brighter future for generations after you. Talk about a win-win situation!
- ETFs Make Investing Easy
Even when you take a close look at particular energy sources like coal, there are still hundreds if not thousands of energy companies to pick from.
So, which company should you put your money behind?
The beauty with ETFs (exchange-traded funds) is that you don’t have to pick! Instead of betting on particular companies, you can put your money into something like a “Coal ETF” which will then automatically spread your investment across a slew of coal companies.
That means you can invest like a pro without needing to be particularly knowledgeable about the energy sector and you can also reduce your exposure to losses! Since the inception of the ETF market, it has grown enormously and is now used by all types of investors and traders around the world. If you’re thinking about launching and operating one, read this article to know more about how to create an etf.
- Everything You Can Think of Uses Energy
In case we haven’t made this clear to you yet, demand is power when it comes to companies that are worth investing in. Beyond oxygen, energy is the number one thing people need to live their lives.
Energy powers homes, planes, food plants, and just about everything else.
An investment in energy is an investment in a product with infinite demand. There is literally no better place to park your investment dollars.
Wrapping Up Smart Reasons to Invest in the Energy Industry
Above, I’ve shared with you 9 smart reasons to invest in the energy industry. My hope is that I’ve managed to impress upon you the fool-proof nature of energy stocks and have inspired you to invest in a variety of companies under the energy umbrella confidently.
Remember, as with all investments, diligence is required whenever you put your money into something. Be sure to do your research on particular energy companies before throwing your money into the ring and best of luck to you earning the returns you’re looking for!