Investing takes careful planning, diligent researching, and requires an ongoing effort to maximize your returns. Everyone has their own way of thinking when it comes to investments. Many people choose to be conservative and would feel more comfortable earning less of a return if it meant they had a lower risk. The opposite end of the spectrum includes people who want to take greater risks to potentially maximize their return. People who begin mineral rights investing are typically somewhere in the middle. Here are some fundamentals of investing your money regardless of the method you choose.
Learn About Different Investments
You can’t expect to make an investment and get rich overnight. While it could be valuable to listen to opinions and advice you see on television or read online, it would be wise to do your own research as well. A news station may not talk much about a certain topic until it’s relevant at the moment, meaning you probably already missed out. Take oil and gas minerals as an example. You may buy non-producing oil and gas minerals and not turn a profit for several years. But once they start producing, your investment from years ago will finally pay off. You can also consider buying producing minerals that offer you instant cash-flow, and upside on each additional well that is drilled on your minerals. You may pay more up-front, but that’s expected when buying minerals based on cash flow.
Diversify Your Portfolio
Traditional investment methods involve investing in the stock market, real estate and more. You may have heard the phrase “you shouldn’t put all of your eggs into one basket,” and that directly applies to investing. Diversifying your portfolio means having some conservative investments and some that are riskier. If you’re typically a conservative investor and don’t necessarily want to invest in the stock market, mineral rights investing offers diversity to your portfolio with a decent amount of risk as well.
Even within mineral rights, you can have a diversified mineral portfolio by acquiring open acreage (non-producing) minerals, permitted (about to have a well drilled) minerals, and producing (cash flowing) minerals. This allows investors to receive immediate and long-term value.
If you’re investing in the stock market, it’s a good idea to seek advice from a financial advisor or someone who monitors the market professionally. However, if you’re considering mineral rights investing, the same advisor may not be able to give you the same expertise. In those situations, getting advice from a person or company who are tied into oil and gas minerals every day can help you make the best decisions for your portfolio.
Ask five industry professionals, and you’ll probably get five different answers. Have a general understanding of why you should invest in mineral rights. Here are some common questions we receive from investors:
- Can I, as an individual investor, buy mineral rights?
- How much capital is needed to buy mineral rights?
- Can anyone just purchase mineral rights?
- If I have a self-directed IRA, can I use that to buy mineral rights?
- If I set aside $250,000 to acquire minerals, should I deploy the capital in one area, or across multiple areas?
- Once I buy oil and gas minerals, and a well is proposed, should I drill that well too, or remain a royalty interest owner only?
- Where should I buy minerals, and how can I calculate my return on investment?
At Eckard Land and Acquisition, we share information and resources about mineral rights to help investors understand the upside and downside of mineral investments.
Understand The Risks Involved With Investing
Any investment comes with a certain amount of risk. Let’s face it, many investors strive for the ‘grand slam’ knowing they could lose it all. Some will succeed, many will fail. This reiterates the point of why you should diversify your portfolio so you’ll have a good balance. When you understand the risks involved with any type of investment you make, you’ll be much better prepared for the ups and downs that are sure to follow.
Eckard Land & Acquisition is an investment company focused on oil and gas minerals. We work with investors to build their portfolio and maximize the return on their investments as much as possible. With over 30 years of experience in the energy industry, we understand oil and gas minerals. Be sure to contact us if you have any questions about your current investment or if you’re looking to pursue a new investment.