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Use Your Gas Savings to Save and Invest

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Yesterday, I was running an errand and I noticed something different about the local gas station. The prices they were advertising no longer started with a crooked number. Gas was $1.999 (I'm going to acknowledge that weird 9/10 of cent they sneak in there.)

In much of the country this is old news. And in other parts of the country the price still starts with a crooked number.

The point is that it was a catalyst for me to think about how low gas prices have gotten. If you work in the energy industry, this is a bad thing. I'm sorry for you. I feel a little of your pain as I've been buying oil stocks (ticker: USO) when it was more than twice the price it is today.

For everyone else, low gas prices probably mean you have some extra money left over each week. You could use this money to support the local economy (a nice meal out perhaps), but I'm going to suggest something different and very predictable:

Save and Invest it.

If you have a brokerage account already set up, you can probably automate $50, $75, $100 a month into it. Personally, I like to use my Digit account as I can text "save $50" and be done with it. Plus with the way Digit works, it's probably already saving money. To read more how Digit works read my review.

It might not make sense to buy a stock with $50 as commissions can eat up a large chunk of that. You can set up an automatic deposit with a lot of mutual fund companies to avoid this.

You might be thinking that $50 or $100 a month isn't going to add up to much. (Quick math: that's $600 or $1200 a year.) Depending on your current financial state it may not mean much. It's all relative right? Bill Gates is certainly not going to care too much.

However, it may mean more than you think.

The stock market has been moving down since the start of the year. This means that you can buy some stocks on sale. (Full disclosure, I'm pimping out the IBM stock that I own. It's trading at 2008 prices with a P/E under 9... and it pays a great dividend).

It's a perfect match. You have extra cash from the low gas prices and the stock market is low so your money buys more shares.

If you want to double dip, you can do some of what I'm doing and buy oil stocks with your savings. I'm not sure you should be investing in USO like I am (I'm starting to think I shouldn't be investing in it), but some of the big gas companies like Exxon and Chevron could be safe bets. The beauty of this idea is that if gas prices recover and you can no longer put that extra money into those companies, you'll be happy to see their stocks have very likely increased as well. It's easier to pay more at the pump if you know that you are getting it back in your brokerage account, right?

What are you doing with your extra gas money? Let me know in the comments.

Posted on January 21, 2016.

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One Response to “Use Your Gas Savings to Save and Invest”

  1. Mike says:

    Investing in shares which prices went down after long period of climbing up is always good idea.
    I wonder only how long will this smaller demand for crude oil will last?

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