Should You Invest In An Energy ETF?

Posted on 18. Feb, 2011 by GuestPoster in Retirement

With the economy still recovering from the recession, you probably have been considering investing in a financial ETF (exchange traded fund), silver or gold ETF, etc.  You may have heard these ETFs that focus on precious metal commodities (e.g. gold or silver), but perhaps your risk tolerance isn’t high enough to “go there.”  If that’s the case, you may want to consider investing in an energy ETF, which offers relative stability and even some morally correct investment opportunities.

There are some environmentally conscientious brokers today that specialize in renewable energy, meaning you can invest in ETFs associated with solar energy or wind power.  This may be investing in the electricity produced from these technologies or in the companies that sell the energy.  These “green brokers” can help you set up a portfolio that suits your investment needs along with your desire to make the planet a better place to live.

Of course, this is the land of opportunity, so you could go the opposite way and invest in a nuclear energy ETF, which is considered a fairly stable investment as no real push is being made to move away from nuclear energy.  In fact, in Europe, nuclear is the preferred energy source for most people.  It is possible that nuclear energy will grow as more pressure is put on politicians to reduce dependence on foreign oil reserves.  As the Gulf oil spill showed, nuclear is not the only environmentally hazardous energy source out there.  Despite a general opposition to nuclear power in America, these plants are likely to remain in the United States for the long term.

Which brings you to the traditional energies of oil, natural gas, and coal, all of which can be invested in through stocks or ETFs. You do not need to invest in all of these separately.  You can go through a broker that can find funds specifically related to energy (whether renewable or not) and who can show you the historical return on these types of investments.  Chances are you will find energy commodity a lot less risky an investment than many of the companies that work with energy (such as oil refineries or gasoline companies).

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Tags: energy etf, financial etf