Every investor dreams of big returns from their investments. Only a few, however, have the vision and insight to create a future-proof investment strategy that can consistently deliver high returns with mitigated risks. When it comes to creating a strategy, a common problem faced by investors is deciding whether to put their money in energy investments or stocks, or both. In this blog post, we hope to ease your concerns by comparing the two investment options on all key parameters. Take a look.
Earning Potential
Although stocks are the most conservative form of investment, they have a few demerits. For starters, there is not much fluctuation in stock prices, which means limited earning potential, largely determined by economies of scale. So, in most cases, investors have to buy a large number of shares in order to reap high returns. Oil and gas investments, on the other hand, can deliver even higher returns, without making investors go through the complexities of trading a large number of stocks.
Risk
Despite increasing focus on renewable sources of energy, the demand for oil and gas is increasing consistently, which means investors can expect an increase in cash flow in times to come. Stock prices, on the other hand, depend on a number of factors such as the issuing company’s internal developments, market changes, and various other unpredictable factors. This makes stock investments a riskier proposition compared to oil and gas investments.
Sustainability
No company is too big to fail and the decline of Lehman Brothers is there to prove that. No matter the company in which you invest your money, there is always a certain element of risk when investing in stocks. Oil and gas, on the other hand, is here to stay. In fact, if there is one thing almost all industry observers would agree upon, it is the fact that the demand for oil and gas is not declining anytime soon.
Tax Benefits
Investing in the stocks doesn’t have any tax benefits, whereas investing in oil and gas comes with ample tax benefits. Three major benefits of oil and gas investments include intangible drilling cost tax deduction, tangible drilling cost deduction, and depletion allowance. Investors can always discuss the details of the tax benefits they are entitled to receive with their investment consulting company or advisor.
Wrap Up
Oil and gas investments clearly present a better proposition for investments compared to stocks. It is, however, important that investors partner with an experienced oil and gas investment consultant that can help them make the most of their investments. If you too are planning to invest in oil and gas in North Dakota or other parts of the US, look no further than FIG Tree Capital Ventures. To learn more about how we can help, simply call +1 214-999-1967 or fill out contact form and one of our representatives will get back with you, shortly.
