Hello Everyone –
You couldn’t tell from looking outside, but summer is here!
As a special request for our summer eNewsletter edition, I’m going to dedicate this issue to oil and gas. Typically, it’s this time of year, where my wallet takes a hit at the pumps. So, I hope everyone enjoys this summer edition. Cheers!
Over the past several months, we have seen a significant spike in oil and gas prices. We see it on the news, hear it from our friends, and certainly feel it in our wallets. From my perspective, there are two things we can do.
1. You can find alternative ways to travel.
2. You find ways to make money off of the global reliance of fuel products
Thus, I decided to dedicate this eNewsletter to oil and gas investments. I want to disclose that this eNewsletter is by no means stating that we should be completely reliant on oil/gas. There are certainly other alternatives; however, oil and gas are a great alternative investment towards battling inflation. Historically, this alternative asset has shown some volatility, but has always been a great diversification play for an investment portfolio.
Oil and gas investment options are no longer limited to a select few individuals. In the last 2-3 decades, the oil and gas market has yielded new investment options to give investors the ability to participate in this alternative asset based on their risk tolerance, necessity for liquidity, income needs, and tax situation.
Here is a quick review of such options:
Mutual Funds: Mutual funds allow investors to participate in a diversified portfolio of different oil and gas companies. This option is considered the least risky of all the options. However, the tax benefits are not available for this option.
Exchange Traded Funds (ETFs): ETFs are traded on the exchange, which endeavors to follow the price of oil and gas. Additionally, this product attempts to use a leveraged exotic structure to multiply the effect of the price changes in oil or gas. Again, there is no tax advantage for this option.
Stocks: Investors can invest in stocks of major oil companies. Companies like Exxon (XOM) and Chevron (CVX) offers you the ability to participate in oil and gas with a liquidity feature on the secondary market. Unfortunately, there are no tax advantages for this option.
Direct Participation: Typically for accredited investors (Investors with 1mm net worth, or making 250k/year). Buying direct means buying interest in established wells, which has been successfully drilled. Investors have minimized their drilling risks with the benefits of a stream of income related to the well. The tax benefits enjoyed by intangible drilling costs (IDCs) are usually not available for this investment, as the investors are not taking any of the risk of drilling.
Working Interest: One risky option is buying into an ownership interest in an oil and gas well. There are significant tax benefits in this investment option, which are not available in any other investment classes. Unfortunately, the payback may take 2 to 4 years before it can be able to yield any return on investment. Note: must be accredited investor.
Royalty Interest: Royalties consist of income received by those who own the mineral rights where an oil or gas well has been drilled. Unlike other countries, in the USA mineral rights are privately held and individuals or groups enjoy the benefits of ownership. The royalty income comes "off the top" of the gross revenue generated from one or more wells. Unlike Working Interest Owners, mineral right owners assume no liability of any kind related to the leases or wells. However mineral right owners are not eligible for any of the tax benefits enjoyed by Working Interest Owners.
For those who want to know if oil and gas investments is appropriate for you, please email/call me at firstname.lastname@example.org / 503-747-6534.
Oil and gas investments are speculative, involve a high degree of risk and are illiquid. Neither the material contained nor the discussion at this presentation constitutes an offer to sell nor a solicitation of an offer to buy any security. Such offers may only be made by means of an offering memorandum.
Recently - I was in the market for a reliable, fuel efficient used car, and let me tell you, I was not the only one. High demand and low supply has the majority of used cars worth more now than they were a year ago. What does this mean for you as a consumer and what can you do to get the best deal.
One big reason for higher prices is that there are less used cars on the market. During the recession, new car sales dropped about 40% between 2005 and 2009, according to Ward’s Automotive Group.
Consequently, today’s high demand for late-model used cars is through the roof. According to RVI Group’s Used Car Price Index, used-car values have spiked 16% compared to April of last year.
If you’re looking to sell your used car, right now might be the opportune time. However, despite the seller’s market, do not expect to make a profit. You are likely to make more than you would a year ago but the value of your used car still greatly depends on the condition and probably will not exceed what you paid for it; however, if it’s the right time to sell for you, here are some tips to get the most out of your car.
Do Your Research. Research how much similar cars are selling for on sites like AutoTrader.com, Cars.com and Kbb.com.
Sell Privately. Once you know what your vehicle is worth at current market value, you are much more likely to get that amount from a private party rather than a dealership. To avoid any scams, ask interested buyers whether they’re planning to pay in full with car or if they have proof of a pre-approved loan.
If you looking to buy a used car it may seem like a daunting task, especially if you don’t have a trade-in as financial cushion. Here are some tips for finding the best deal.
Look at Models That Were Recently Redesigned. If the used model doesn’t look the same as the new model the prices are likely to be lower. Some examples are the Honda Civic, Volkswagon Jetta and Honda CR-V.
Buy a Rental. Although some rental cars may be high on miles, most were purchased for being high quality cars that are serviced regularly. Also, because of standard rental policies, the driver’s are likely to have been business people over the age of 25 who drive fairly conservatively.
However you decide to navigate this market make sure you negotiate on the price to get the best deal.
Friend. Mentor. Leader. Lou Radja. I’ve been fortunate to lean on Lou over the last year, which was difficult for most of us. His words of wisdom and gentle reminders are worth sharing. Enjoy!
The dictionary defines a potluck as a meal, especially for a large group of people, to which participants bring foods to be shared. One of the reasons I love potlucks, beside my obsession with food, is the last part of the definition above; “…participants bring foods to be shared.” I love the communal aspect of a potluck and how each one of us gets to play an important role in the outcome and overall experience. See, you and I get to enjoy all the great dishes and cuisines brought by others as they get to enjoy ours. A potluck relies on everyone doing a “little” instead of some doing “all”. Shared responsibilities. Shared successes. The same can be said about LIFE!
Take a moment if you will and imagine life as a potluck and ask yourself the following question; “Did I bring my best dish?” “What is my contribution to this potluck?” Some people take time and prepare for the potluck; bringing their signature homemade brownies, chicken recipes or grandma’s apple pie. Others stop by the local grocery store a few minutes before the potluck to get a bag of potato chips, sodas, or 3-day old chocolate chip cookies. Which one are you? What kind of dish do you bring to life’s potluck?
Think about all the wonderful ingredients you have to make the best dish; your passion, your talents, your ideas, your time, your resources, your connections, your energy… You have everything you need to prepare your best dish and bring joy the entire group. Your best dish is about living your dream, not someone else’s. Your best dish is about turning your vocation into your vacation. Your best dish is about living out on the outside, who you are on the inside. Your best dish is about putting all you’ve got in all you do. Your best dish is about making work a labor of love. Your best dish is about contributing to society and giving back. Your best dish is about helping others prepare theirs!
Life is like a potluck. Bring YOUR best dish
Jason Gong is an investment advisor representative offering securities and advisory services through Cetera Advisors LLC, member FINRA, SIPC. Lifelong College Savings is not affiliated with Cetera. The views are those of Lifelong College Savings Group and should not be construed as investment advice nor that of Cetera Advisors LLC.