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During the last ~2.5 years I have managed to save around 60K $, the money is sitting in the bank account and has been there for a while. This money could be doubled as my girlfriend's savings are approximately the same and she is also looking for an investment opportunity. We are both 26 at this time and have no assets or debts other than this money.

I have been thinking for a while about investing it and the recent Oil price drop, I think presents an excellent opportunity. I was hoping that someone could help me respond a couple of questions:

  1. I have a conservative approach to these savings that's why they have been sitting on the savings account. Is Oil considered a riskier product compared to Stock or Real Estate? If so given my (our) current situation, What would you suggest?

  2. Assuming that I decide to move forward, I have read that one way to get exposure to oil prices is through an Oil Company stock, I dislike this option as that company's results could be affected by many other factors aside from oil prices. What is the best way to link your results to actual oil prices?

Thank you!

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    To those who would vote to close. "Should I invest in...." or "Is now a good time to invest in" are both opinion. How to invest seems legit to me and the answer below addresses this. – JTP - Apologise to Monica♦ Jan 2 '16 at 16:31
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    @NuWin It's a scarce useful resource and the main source of energy for many countries. Its also the lowes that has been in 6 years, and looking at historical prices I would bet that price will be higher in 12-24 months. Diversifying reduces your risks, and as a consequence, your maximum gains :-) – tokenizer_fsj Jan 4 '16 at 1:13
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    @JoeTaxpayer Good points re: on/off topic. But the actual enumerated questions do call for opinions: #1 Risk compared to real estate + "what do you suggest" and #2 What's the best way to link to oil prices? These are not questions about the mechanics of making some trade that the OP has defined - They call for opinions on all points. The top answer, while reasonable, does not actually answer these questions, imo. The other answers offer primarily opinions about the merits of trading oil stocks and funds. – user32479 Jan 4 '16 at 3:39
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    By "best way to link results to actual oil prices", do you mean closest to a 1:1 correlation? Some may think "best" means mostly correlated but maximum loss is capped. – Mark Plotnick Jan 4 '16 at 19:53
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    @tokenizer_fsj A lot of people have lost a lot of money on "what goes up must come down" and its companion. There are a lot of new wells already in the ground in North America dug with new technology and OPEC seems pretty weak right now... It's probably worth having a good reason why the market is mispricing oil. – rhaskett Jan 6 '16 at 0:30
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One possibility would be to invest in a crude oil ETF (or maybe technically they're an ETP), which should be easily accessible through any stock trading platform. In theory, the value of these investments is directly tied to the oil price. There's a list of such ETFs and some comments here. But see also here about some of the problems with such things in practice, and some other products aiming to avoid those issues.

Personally I find the idea of putting all my savings into such a vehicle absolutely horrifying; I wouldn't contemplate having more than a small percentage of a much more well diversified portfolio invested in something like that myself, and IMHO it's a completely unsuitable investment for a novice investor. I strongly suggest you read up on topics like portfolio construction and asset allocation (nice introductory article here and here, although maybe UK oriented; US SEC has some dry info here) before proceeding further and putting your savings at risk.

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  • A general commodity based Investment Trust / Mutual bit be a possibility - though for a first investment stick with an Indexed ETF instead of specialist higher risk investments. – Pepone Jan 3 '16 at 20:56
  • @Pepone: good point; updated with a link to an article describing some alternatives to ETFs which still aim to track oil price. (Obviously there are also plenty of mutual funds and trusts out there investing in energy sector stocks, but the original poster doesn't seem to be interested in such things). – timday Jan 3 '16 at 21:57
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    Personally I find the idea of putting all my savings into such a vehicle absolutely horrifying; I wouldn't contemplate having more than a small percentage of a much more well diversified portfolio invested in something like that myself, and IMHO it's a completely unsuitable investment for a novice investor* – Fattie Jul 14 '16 at 13:56
  • @Joe Blow: Not sure what the point you're making there re-quoting me is? Just because I'm horrified by something doesn't mean the details of how it might be done if someone really wanted to do it are any less interesting. Ah, wait... I just saw your comment on the original question too... yes I absolutely agree! – timday Jul 14 '16 at 19:41
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    Hi @timday! to be clear, very simply I was just absolutely agreeing with you 100%, by simply repeating your text!! :) – Fattie Jul 14 '16 at 21:35
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This is only a partial answer to your question #1.

If you have a conservative approach to savings (and, actually, even if you don't), you should not invest all of your money in any single industry or product. If you want to invest some money in oil, okay, but don't overdo it.

If your larger goal is to invest the money in a manner that is less risky but still more lucrative than a savings account, you should read up on personal finance and investing to get a sense of what options are available. A commonly-recommended option is to invest in low-cost index funds that mirror the performance of the stock market as a whole. The question of "how should I invest" is very broad, but you can find lots of starting points in other questions on this site, by googling, or by visiting your local library.

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If you've decided to ignore the sound advice re: oil company stocks, and you want something directly linked to the price of oil, do the following:

  1. call a commodities trader (see financial pages, WSJ)
  2. tell the individual your situation

  3. Understand that oil producers would like avoid the risk of a price drop, and oil consumers (refiners, electric utilities, etc.) would like to avoid the risk of a price rise.

  4. Understand that you are about to assume their risk.

  5. accept the very real & likely possibility that you will lose your money. Quickly.
  6. act accordingly
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  1. Royalty trusts track oil prices (they're a pure play on ownership of a portfolio of mineral rights and do not otherwise have the operations that the oil companies themselves have). Many publicly traded ones listed at the embedded wikipedia link.

  2. Oil tankers are having a bang up business right now as described in the article, but that's because of the low prices and flood of product from the middle east. The article notes that inventories are near capacity, so terminals and pipelines may be in for a few good years, though these do not directly track oil price. However, as a way to bet on oil or oil services, many terminals and pipelines are organized as publicly traded master limited partnerships or MLPs, often spun out of a major oil company for tax reasons, allowing fine-grained investment in specific assets.

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