energy trusts

May 6, 2008 11:14 AM

my friend invests a lot of his money in energy and oil trusts. typically these trusts pay a dividend per share every month...and so they tend to average higher yields than most regular stocks. PWE is one of them. im considering putting money into an energy trust, but i want to know if the buzz is legit. somebody write back...
posted by locoindio to Education (4 answers total)

I would be careful - many of those trusts have a riduculous level of fees. I would go with an organziation that has a reputation for low costs and watching out for shareholder interests. For example, Vanguard has both an energy sector mutual fund and an energy sector ETF.

Also, sector funds tend to be very volatile (big swings up and down). You would only want to put a small % of money (maybe 5%) in a sector specific investment like this.
posted by metahawk at 11:34 AM on May 6, 2008

The Google Finance pages on some of these trusts summarize some of the issues. You should look there. If you don't understand what's on pages like those in the discussions and forum posts about these trusts, they may be a bit complex for you. There are unique tax and withholding issues. Is a high yield stock right for you? Do you know you want to give up appreciation to have a significant steady yield? Is additional accounting and tax preparation cost going to significantly eat into your gains?
posted by iknowizbirfmark at 11:38 AM on May 6, 2008

No offense but you kind of sound unsophisticated about general investing concepts. I'd do a ton of research, or consult with a financial advisor, or both, before committing a serious chunk of your money into anything like this.
posted by bdk3clash at 9:10 AM on May 7, 2008

Response by poster: bdk3clash,
im a novice. in fact, i can safely say i know nothing. im really not sure where to do research, who to talk to, etc. but experienced people have given me tips on these energy trusts as being somewhat steady flows of income not a lot of it. but a profit nevertheless. where should i go to research?
posted by locoindio at 2:34 PM on May 7, 2008