Alternative investments have existed for decades, but they’ve become increasingly popular in recent years. In addition to technology making different types of investments more accessible than ever, Phoenix Capital Group says investors today are seeking higher returns and greater portfolio diversification through alternative investments.
These investments offer substantial returns and provide a robust hedge against typical market volatility.
This makes alternative energy investments an attractive option for investors who want to maximize their gains.
Below are some advantages of energy investments and ways you can maximize returns:
High Return Potential
A common saying in trading circles is that one of the best investments you can make is in the S&P 500 index. That’s because, on average, the stock market index has gained about 10% each year.
However, there are a few issues with that saying.
Yes, the S&P 500 has averaged annual returns of 10.521% over the last 30 years, as of May 2024. When factoring in inflation, though, the returns sit at only 7.781%. While that’s certainly not bad, it’s not groundbreaking either.
Second, and maybe most importantly, the theory of investing in the S&P 500 only works if you invest in an asset such as an index fund that tracks it. If you decide to invest in individual stocks listed on the S&P 500, you could easily choose the wrong ones and end up with lower returns — or even losses.
The energy sector, by contrast, has generally demonstrated an ability to deliver returns. Bond offerings from Phoenix Capital Group, for example, may yield anywhere from 9% to 13% annually, which may outperform many traditional investment options, including the S&P 500.
However, it’s crucial to understand the differences between these investment vehicles.
When considering risk and safety, the S&P 500 index fund is generally seen as a safer investment due to its diversification across 500 large-cap companies. This diversification helps mitigate the risk associated with individual company performance, making it less volatile compared to individual stocks. Phoenix Capital Group’s bonds, while offering higher potential returns, are speculative investments dependent on well production. This means they carry higher risk but also the potential for significant gains.
Liquidity is another important factor. The S&P 500 index fund boasts high liquidity, allowing investors to buy or sell shares easily on the stock market. This liquidity provides flexibility in managing investments and accessing funds. Phoenix Capital Group’s bonds, on the other hand, have limited liquidity. These bonds may not be as easily sold before maturity, which can be a consideration for investors needing quick access to their funds.
Regarding return potential, the S&P 500 index fund has historically provided average returns of 10.521%, which adjusts to 7.781% when accounting for inflation. Phoenix Capital Group’s bonds, with a yield range of 9% to 13% annually, present an opportunity for higher returns compared to the average S&P 500 returns. These bonds are designed to offer attractive returns, particularly for those seeking alternatives to traditional stock market investments.
When evaluating investments, it’s important to weigh all these aspects and compare them to your other options to make an informed decision. Each investment vehicle has its unique characteristics and risk profiles, making it essential to consider your financial goals, risk tolerance, and liquidity needs. Phoenix Capital Group’s bonds can be a compelling choice for those looking for higher returns and willing to accept the associated risks.
Industry Growth and Demand
The global demand for energy continues to rise, driven by both developed and developing economies.
The International Energy Agency reported that the global demand for electricity grew by 2.2% in 2023 and estimates that it will rise by an average of 3.4% every year through 2026.
The overall demand for energy is projected to be even stronger. According to recent studies, global energy demand is projected to jump by 48% over the next 20 years.
This consistent demand and growth support the stability and growth of investments in the energy sector. Even as diversification within the energy sector grows, demand for oil and gas continues to grow as well.
Resilience to Economic Cycles
When the economy turns sour, so do many traditional investment vehicles. However, investments in the energy sector tend to be less susceptible to these downturns due to the essential nature of energy.
During the 2007-2008 financial crisis, stock market volatility was at an all-time high. The Dow Jones Industrial Average dropped five consecutive days between October 6 and October 10 in 2008, dropping 18% in total to mark its worst week ever. That same week, the S&P 500 Index dropped more than 20%.
Conditions became so bad that trading was suspended on three consecutive days: October 9, October 10, and October 13.
During that same period, the oil and gas industry thrived. Oil prices hit record highs in the first half of 2008, with the price of a barrel of oil soaring to $145 by July 3 of that year. Although oil prices dropped in the second half of 2008, it was not nearly as severe as the stock market’s decline.
Expert Insights and Strategic Approaches
When very successful investors tout the importance of having energy investments in their portfolio, it’s worth taking notice. That’s exactly what Warren Buffet has said about his investment portfolio with Berkshire Hathaway.
Buffet has consistently stated that energy investments are important to the stability of his portfolio, and he always puts his money where his mouth is. Berkshire Hathaway increased its stake in Occidental Petroleum by purchasing another 2.95 million shares, bringing its total stake in the company to more than 29%.
He keeps pumping money into energy assets because he believes they will become even more valuable over time due to the growth in the global market.
By following some of the strategies and insights that successful investors like Buffet employ, you can capitalize on the growth potential of the energy sector as well.
Enhancing Returns with Phoenix Capital Group
Investors who want to improve returns may want to consider the energy sector as part of their alternative investment strategy. Companies like Phoenix Capital Group offer unique opportunities, with bond offerings that aim to yield returns between 9% and 13% annually. Leveraging these high-quality investments can help investors achieve significant gains and portfolio diversity.
Investing in a company like Phoenix Capital Group provides exposure to the oil and gas industry, potentially enhancing your returns.
