Benefits of Investing in Natural Gas – Energy Investing

By Advisorymandi
22-November-2018 8:08:04 AM

Most investors had thrown in the towel when seeing the decline in natural gas prices. But, there are good reasons to invest in natural gas. There are multiple benefits of investing in the natural gas commodity. Not only it will help in diversifying a heavily equity-based portfolio but also work out as a good passive income source to generate wealth in long-terms. With the current stats, it believes that the demand for natural gas is expecting to grow twice in not too distant future. Natural gas is a reliable, cheap, and abundant source of energy which can practically replace other fossil futures and challenges the renewables to meet the future energy demands.

Direct investments in Natural Gas (NG) commodity can bring substantial and tax advantageous benefits for investors who are invested in this commodity while diversifying investments and bringing potentially higher returns. On top of that, the price of natural gas in India is lower than crude oil, which makes it a more attractive investment option. With the expanding GDP and flourishing commodity market, the Natural gas commodity is the best way to invest in the commodity market. So, let’s take a look at the benefits of investing in natural gas.

Benefits of Natural Gas Investing – Energy Investing

Now you know that the demand for natural gas is continually rising every day. Gas demand is not going down especially when it is one of the energy resources which emits relatively low carbon compared with other fossil fuels such as oil and coal. In short, it is the future of source of energy. Given its immense popularity, Natural Gas (NG) is one of the reliable commodities to invest in the commodity market. There are a lot of benefits of investing in commodities especially in Natural Gas (NG). For energy investors, it is a one way to ensure the wealth-growth.

Think about it! Almost all countries are practically relying on natural gas to run manufacturing & other industries, transportation, and numerous businesses etc. Even in our personal lives, natural gas plays a major role in fulfilling the basic necessities such as cooking appliances, electricity, gadgets, and cars etc. All of these either run on gas or oil.

Seeing the rising demand, Natural gas is a compelling investment opportunity and investing in it can bring out good yields over time. But, like other investments natural gas are also controlled by a lot of factors and given the volatility in this commodity, risk management is utmost needed while investing in the natural gas commodity.

Nevertheless, let’s find out the reasons for investing in natural gas.

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Investing in Natural Gas can provide strong ROI and work out as a reliable source of passive income in future

If we look at the recent stats then the current supply of Natural Gas (NG) is about 23% of the world’s energy needs which is expected to rise to 26% by the year 2040. It may not look much of an increase, but the global energy demand expected to rise by 25% over the same timeframe which represents 40% growth in the Natural Gas (NG) market.

You may not believe it but it is a huge opportunity for energy investors. On top of that, it is using in many industrial and commercial activities.


Natural Gas Consumption (In 2017)

Seeing the natural gas consumption of 2017, it is clear that the demand for this commodity is going to rise even further. Besides, it is the only fossil fuel which is in competition with renewables. So, you don’t need to see renewable resources as a threat to your natural gas investments. On the contrary, both can work together to meet the global future energy needs. So, the natural gas has a strong ROI potential.

Some of you may worry about the production of natural gas and rising demand. Well, truth to be told, the natural gas is so abundant, there’s plenty to meet the rising future demand. This is what made natural gas stocks an ideal investment option which you can consider to place in your investment portfolio to fuel your long-term returns. Although these profits don’t come entirely risk-free. But, with improved technology and the shift to developmental have changed the dynamics and lowered the risk of investing in natural gas stocks.

If you are looking for a passive income then you should look out for stocks of companies that have access to global gas markets to get rewarded returns in long run.


Keeping Natural Gas (NG) stocks in portfolio provide protection from short-term market fluctuations

Natural Gas stocks have a very low correlation with the traditional stocks. So, a diverse portfolio that relies on multiple investments along with natural gas investments will be able to provide protection to the portfolio in case of stock stumbling. It is because the natural gas and economy are indirectly proportional to each other.

Besides, as we said earlier, there are many benefits of investing in commodities. Keeping natural gas stocks in the portfolio not only provide diversification but hedge your investment against inflation and provide good returns over a period of time.

Natural Gas Investments have some most attractive tax incentives

One who started trading natural gas must’ve noticed that commodity trading have some tax-related benefits such as tangible drilling cost deductions. On top of that, the commodity transaction tax imposed on non-agricultural commodities such as Natural Gas is off 0.01% CTT which is same as on equity futures. However, it is an extra burden on traders who already incurred costs on transaction charges, brokerage charges, stamp duty, and deposit margin etc.


Hope, this article helped you understand the benefits of investing in natural gas. If you have any query or would like to suggest something then please doesn’t forget to mention in the comment section below.


Note: All information & data provided in this article is for the educational purpose as well as to give general information on the finance & economy, not to provide any professional advice or service. Views & opinions are not biased against the company and do not affect any official policy or any other agency, an organization within the content.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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