Vista Financial Advisors

Investing in Tomorrow. Today.
Vista's Investment Strategies

Energy, Commodities & Natural Resources

So much can be said about energy and how it affects our daily lives!  Virtually everything we consume is affected in some way by energy prices.  Obviously, gasoline that we buy every few days and utility bills that we pay every month are directly impacted by energy prices. It goes far beyond that though.  Plastics, many pharmaceuticals, petrochemicals and scores of other products are also derived in large part from crude oil.  Then you have to consider that almost every product we buy is transported to market, and that transport cost is impacted by oil prices.  Put simply, energy prices are the major cause of increases in our cost of living (i.e.  inflation).  Now we know the catalyst: inflation.

What are the key consequences of rising inflation?  This question often captures the main fear of people nearing retirement.  They currently have enough money to meet their planned lifestyle, but if the cost of living rises considerably in the future, they might run out of money or fall short of the amount they need to meet their budget.  Here's where Consequence Investing can directly address those concerns.

By allocating a percentage of your overall investments to energy investments, you establish a "hedge" against inflation or rising cost of living.  The way this works is that, when energy prices rise and your cost-of-living increases, the value of your portfolio and often the amount of the dividends paid by your energy investments will also increase to protect you against the consequence of increasing inflation that would otherwise damage your standard of living.