In today’s economy, smart retirement savers invest in alternative assets to the stock market to build earnings in their portfolios. Investments in oil and gas are examples of alternative assets, and the potential returns are worth exploring.
Have you ever considered how investments in oil and gas can impact your potential to build retirement wealth? From land to commodities to royalties and more, investments in oil and gas represent alternative assets permissible in self-directed IRAs and solo 401(k)s.
What Are Self-Directed IRAs and Solo 401(k)s?
Self-directed IRAs and solo 401(k)s follow the same rules as their more conventional counterparts with two exceptions:
- Plan owners choose their own assets.
- These plans allow alternative investments to the stock market.
Yes, self-directed accounts give plan owners have total control of their investing decisions. And invest in alternative assets besides typical stocks, bonds, and mutual funds. People who self-direct enjoy the freedom to choose from a wide variety of investment alternatives to the stock market that can potentially build wealth at a greater pace than traditional assets may. For these reasons, self-directed plans are becoming more widely recognized as viable tools to build wealth for retirement.
You’ve probably heard the term “real estate IRA.” That’s because real estate investments are the most popular assets in self-directed accounts. But the opportunities don’t stop there. Precious metals, foreign exchange and futures trading, improved and unimproved land, private equity, livestock, timber, private lending and mortgage notes—as well as oil and gas options—are just a few additional examples of self-directed IRA investments.
What Are Examples of Investments in Oil and Gas?
There are numerous opportunities you can explore.
A few common oil and gas assets include:
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- Land that’s ripe for oil and gas mining and drilling
- Interest in refineries and/or drilling companies
- Commodities and futures contracts
- Oil and gas royalty interests
- Investments in oil and gas stocks and mutual funds
If you are knowledgeable in the oil and gas industry, you probably feel comfortable adding these assets to your portfolio. If you are not familiar or unsure, you can consult professionals in that field to educate and better direct you through the decision-making process.
You can also invest in other energy options such as wind and solar, hydroelectric energy, natural gas and coal, geothermal energy, biofuel options, and more.
How investments work in a self-directed IRA:
People who self-direct are in total control of choosing investments for their IRAs 
and/or solo 401(k)s. You don’t rely on a third party to make investing decisions.
And you don’t take taxable distributions from your retirement account to invest—you invest with funds that come directly from your plan. So even though you choose the investment, your plan owns the asset, not you. All income derived from your plan’s holdings is deposited straight into your retirement account and enjoys the tax-sheltered, wealth-building protection your retirement plan provides.
How to Determine if Oil and Gas Options Are Right for You
Performing due diligence is critical.
Those interested in oil and gas options should pay attention to current news reports regarding the market. Whether you invest to earn retirement income or personal income, you want to understand the benefits versus the risk of any investment you make.
With that being said…
According to a recent article on the increase of oil and gas drilling published by Reuters, “Exploration is a long-term, high-risk business. Big-ticket offshore projects typically take five years to develop from discovery and at least another 10 years to return the initial investment. But as a source of profit, it has proved more reliable for the energy majors than the very different business model of producing renewable energy. Upstream oil and gas have historically had returns of around 15%-to-20%, while most renewables projects have delivered up to 8%.”
Additional information published online by OilPrice explains 5 Trends Driving the Oil and Gas Industry in 2023.
The above articles cover the pros and current trends of oil and gas assets, but you should also explore the cons. In fact, we urge you to do so. Remember, you’re in control of choosing your assets. But you must also be in control of the vetting process to confirm an investment’s potential and to avoid fraud.
Get Started Investing in Oil and Gas Today
What does the above information mean to you? Do you feel investments in oil and gas may be beneficial to your portfolio? Are you ready to become a member of a growing class of elite and beginner investors who use self-directed retirement plans to make investments in oil and gas?
If you’re answer is yes, contact Advanta IRA today.
Advanta IRA is a self-directed IRA services provider serving clients across the U.S. We don’t sell investments or give advice. We perform necessary recordkeeping aspects for your account within IRS compliance so you can spend your time looking for your next investment.
With over $2.5 billion in client assets under management, our clients receive white-glove, one-on-one service from our team of experts. We help you navigate each investment process with ease and offer free webinars, informative articles like this one, and lively podcasts designed to arm you with the knowledge you need to take control of your financial future.
Additional resources on energy assets and investments in oil and gas:
Recorded webinar on oil and gas royalty investments
If you want to watch a recorded webinar to learn how to invest in oil and gas royalties, you can access it here: Invest in Energy with Oil & Gas Royalties in an IRA.
Relevant articles on energy investments and self-directed retirement plans
Solo 401(k)s vs SEP IRAs vs SIMPLE IRAs: Retirement Plans for Small Business Owners
Renewable Energy Investment Alternatives to Oil and Gas for Your IRA
