Oil companies drill, extract, refine and distribute oil.
If you are interested in oil and energy, you might be interested in owning an oil company. Buying an oil company outright is difficult, but becoming an owner in an oil company is easy. You can invest in an oil company and become part of the industry. While there are risks with any investment, if you make smart investments, you can make a large profit.
Instructions
1. Research your investment options. There are many publicly traded oil companies that you can easily purchase through any stock brokerage account. The largest Exxon Mobil, Chevron, ConocoPhillips, and Valero Energy are all in the 10 largest companies in the world. Many more oil companies have stock available. Do an in-depth analysis to find the intrinsic value of the company you are interested in purchasing. The most common method to find a company's value is a discounted pro-forma, free, cash-flow analysis.
2. If you do not already have one, set up a brokerage account. Many full-service brokerage firms offer information on target stock prices, which can be a valuable tool when deciding which oil company's stock to purchase. Some firms have high trading fees and some have low fees, but offer fewer services. Be sure to look into a brokerage fee structure and free service offerings before opening an account.
3. Execute your trade. Fund your brokerage account with enough money to purchase shares of the company you plan to buy and fees. Decide how much money you are willing to risk in your investment before you purchase. It is possible that your investment will lose value.
4. Monitor your investment over time. If the company has a strong, profitable year, your stock value will likely increase. If the company has losses, the value of the stock will go down. Ensure you are confident of your investment. If you believe the value is going to decrease in the future, sell your shares.
Tags: your investment, brokerage account