Resource-Related Stocks

Several categories of stocks provide investment exposure to natural resources values. To invest, you buy shares of mining companies, energy companies that focus on oil and natural gas exploration and production, and lumber companies that own timberland. A couple of specialty groups include the small number of timber companies organized as real estate investment trusts, water utilities and royalty trusts. Tax rules allow REITs to avoid corporate income taxes and pass all profits through to investors. Utilities are regulated and provide stable dividend income. Royalty trusts receive royalty payments from energy wells or mines on designated land and pay attractive dividends to investors.

Exchange-Traded Funds

In the universe of exchange-traded funds there are several with a global natural resources investment focus. An EFT owns stocks to match a designated index. An ETF will mirror the index returns without the possibility of under-performance due to bad management. The internal expenses of an ETF will be lower than an actively managed mutual fund. ETF shares trade on the stock exchanges, and you buy and sell shares through a brokerage account. With a discount online account, the cost to buy or sell will be $5 to $10 each time you place an order.

Investment Risks

References

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