- 1). Determine how much money you want to invest in the oil and gas sector. Many online stock broker accounts require a minimum deposit of $1,000 to open an account. This is enough money so that broker commissions do not eat up too much of your profits.
- 2). Exchange traded funds or ETFs offer diversified funds in focused sectors. The data section at IndexUniverse.com allows you to screen ETFs by sector. A selection of energy sector ETFs gives a choice of 16 different funds. The energy sector also includes companies that provide energy through coal, nuclear power and alternative energy.
- 3). Narrow down the energy sector ETFs by entering the fund symbols at ETFConnect.com and reviewing the top stock holdings. For investors in ETFs, a large asset base and low expenses are benefits. Two energy ETFs that give the best exposure to oil are the SPDR S&P Oil and Gas Exploration and Production ETF, symbol XOP, and the Energy Select Sector SPDR Fund, symbol XLE.
- 4). Be aware that of the two funds, XLE has higher exposure to the large, integrated oil companies and is less volatile. XOP has more exposure to riskier stocks and has had larger moves in both the up and down directions. Determine which fund fits your investment philosophy or decide to split your investment between the two funds.
- 5). Place the order through your online broker account. It is not necessary to purchase in round lots of 100 shares. These ETFs will give you an investment in a broad portfolio of companies in the oil business.
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