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How to Save Money by Acquiring Subsequent Year’s Gasoline Right now

August 27, 2012

ETF

How to Conserve Funds by Purchasing Next Year’s Fuel These days

Don’t you just know that you may be paying out $ 2.50 or $ 3.00 for a gallon of gasoline soon? Doesn’t $ four.00 fuel make you nauseous? So what can you do about it in addition to ride your bicycle down the freeway at rush hour? You really should consider locking in the cost of gas for the next 2 years.  If you could purchase two many years of gasoline at today’s price tag, would you do it? If you have the funds, that could be a great investment. Can you purchase a two-year pre-paid gas card? I never believe so.

The trick is to use an Exchange Traded Fund (ETF) known as “USO”. USO is a good indicator of the price of a barrel of oil, which is a rather very good indicator of the value of a gallon of guess. There is by no means an exact correlation, but in excess of time, there is a pretty very good match.

In order to buy 2 many years of gas, the very first phase is to determine how considerably gas you need to have. As an approximation, assume you drive twelve,000 miles a yr in your vehicle, you get twenty miles per gallon, and fuel currently costs  $ 1.90. Your 2-yr fuel bill would be $ 2280 (2 x twelve,000 / 20 x 1.90).

You can effectively buy  2 years of fuel by getting $ 2280 really worth of USO. With USO currently promoting for about $ 24, you could get a hundred shares of USO and be quite close. If you have far more than 1 automobile, you would merely purchase one hundred shares of every single USO for each and every car you have. Of program this is an approximation. Make your own calculation making use of how a lot you drive each vehicle, and the mileage that every single car will get. There’s no stage in making an attempt to be exact, nevertheless. An approximation, like $ 2400, is most likely excellent ample.

The exciting issue about buying oil is that you can have a rather excellent concept of where the cost is going – up! Do you assume the cost of fuel is going back down to $ 1.50 and staying there for many years? Of program not. Do you assume it’s going to $ four.50 this yr? Most likely not.  I don’t know where the cost of gasoline is going, but the odds of it going down and staying there are very low, and the odds of it going somewhat increased, or a great deal higher, are pretty good.

Bottom line: if you want to offset the value of rising gasoline, an investment in the USO ETF can do just that. If you can afford it, purchasing 100 shares of USO for each automobile you own is a excellent begin. If the value of oil rises 25%, then the acquire in your investment must offset the added value you shell out at the pump.

Disclaimer: Please note that this report is meant for training it is not a recommendation to purchase or sell securities.

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