Friday, February 24, 2012

Energy Investing is Worth Your Time and Effort - Money Morning

Last week, I received a question that really stood out in my mailbox.

It was a variation of similar questions that typically come in from.

Now, we can't advise individuals on how to manage their money, but we can let them know the obvious secret about investing in the markets. The question had been sent by a man named John who wanted to know the following

"I am starting out with such small amounts of money to invest. Is investing in the energy markets even worth my time and effort?"

Simply put, the answer is a resounding "Yes."

And here's why.

If you have money sitting in a checking account right now, it's earning nothing.

If your cash is in a savings account, you're making a little more than 1% annually on that money (if you're lucky).

So sure, your money is stagnant. You probably knew that. But it gets even worse...

See, the buying power of your cash is falling, even as I type this letter, due to consumer inflation.

So you can sit back and watch your hard-earned cash whittled away to nothing...

Or you can fight that assault on your wallet by investing in the most profitable sector of all time.

Last week, I talked about the Alerian MLP Index (NYSE: AMJ), which tracks the performance of the energy Master Limited Partner (MLP) sector. This electronic trading note (ETN) pays a current yield of 5% annually, and has appreciated by 100% in the last three years.

I showed you how a $10,000 investment back in March 2009 would be worth roughly $23,500 today.

But $10,000 is a lot of money for many investors. (It's certainly a lot for me.)

So, I did the math again, but this time starting with a more modest amount. And the results are still impressive.

If you had purchased 25 shares for $494 back in early 2009 and reinvested the dividends, your "small amount" would be worth $1,158.51 today.

That's a 134% gain.

On the other hand, if you'd have kept it parked "safely" in a bank account at 1.5% over three years, your $500 would be worth roughly $522.83 after three years.

And here's where it gets interesting.

Source: http://moneymorning.com/2012/02/24/energy-investing-is-worth-your-time-and-effort/

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