The stock exchange has a list of oil and gas companies in which you can invest in bonds and stock options. Risk is involved whether you buy commodity contracts, mutual funds or certificate of deposits.
You will have more available investment options with your self directed IRA. The reason is due to the tax free profits, tax deductions, asset protection and estate planning options.
If this is something you are interested in then you will want to check out fractional interest oil and gas leases with your 401K custodian.
IRA investment options for your retirement fund
The only way you will be able to take advantage of these asset growth stocks is to set up an account with a Self Directed Individual Retirement Account.
By selecting your own investments you can diversify your portfolio to include high and low risk assets such as precious metals, limited liability companies, mortgages and deeds of trust, partnerships and joint ventures.
It will only be from these alternatives from your employee sponsored plan that you will be able to build your wealth after retirement.
How does a self directed IRA work?
The interesting thing about this type of IRA is that it allows the account owner to make investment decisions and investments on behalf of the retirement plan.
As for the IRS regulations they require that a qualified trustee, or custodian hold the IRA assets on behalf of the IRA owner. This is so that they can maintain the assets and all transactions records.
You will be able to request your client statements and find out the rules and regulations pertaining to your transactions,that you decide to invest in, such as stocks, bonds, and mutual funds.
Investing in oil and gas royalties
The benefits of a oil and gas income trust is that it focuses on the production and mining of a type of corporation in the U.S. or Canada whose profits are not taxed and are distributed to shareholders as dividends. This is how double taxation is avoided when the dividends are later taxed as personal income.
Royalty trusts will allow you to own the natural gas wells, or mineral rights of wells that is traded on the public stock market. The extraction of petroleum at mining properties gives you the power to hedge against inflation.
It is important to note that the high yields are based on interest rates, so to achieve high distribution returns investors can speculate on commodities without having to buy future contracts.
Things you should know about commodity based royalty trusts
Investing in natural resources and raw materials has its risks and can fall to the volatility of the commodity market. This is because the oil field in which your invested needs to be producing steady income based on the supply of oil.
The nature of oil field investments is that the oil eventually runs out and that is what makes investing in these types of assets different from other royalty trust such as iron ore assets. That is why you should be diversified into other assets such as renewable energy stocks which is an alternative to fossil fuels and nuclear energy.
source: Benefits of Royalty Trusts - nvestopedia.com/terms/r/royaltyincometrust.asp
Disclaimer: This is for informational purposes only and is not meant to give investment advice, it is recommended that you consult a investment broker before putting money into any type of stocks.