How to Invest in Water Stocks

By Faith O

  • Overview

    Water stocks are stocks of companies involved in the business of water. This business includes water cycle management, water treatment, water production and distribution, billing, meter reading, and management for municipalities. That's only to mention a few. Investing in water can be done by buying stocks of individual companies or investing in funds that contain the stocks of water companies. With an increased shortage of--and demand for--global fresh water resources, it is not surprising that there is an increasing interest in water and water-related stocks.
    • Step 1

      Make a decision on whether you want to invest in individual companies or in certain water-related exchange-traded funds (ETFs). You may also want to decide on whether you want to stick with domestic companies or invest in overseas companies as well.
    • Step 2

      Research the sector to identify stocks of interest. If you want to invest in individual companies, you should research the sector and industry to pick out stocks of interest. See a link in Resources below to the water utilities industry page on Yahoo! Finance. As of January 2008, some of the top players include American States Water Company (AWR), American Water Works Company (AWK) and Aqua America Inc. (WTR).


    • Step 3

      Research water ETFs. If you are interested in water ETFs or other funds, the same diligence applied to individual company stocks is needed in order to find what you are comfortable with. Common players in the water ETF world are PowerShares Water Resources (PHO) and First Trust ISE Water (FIW).
    • Step 4

      Decide on how much you want to invest in water stocks. It is always a good idea to make sure that you are sufficiently diversified, and you may want to get the professional advice of a financial adviser.
    • Step 5

      Open a brokerage account if you don't already have one. There are so many online brokerages to choose from. Most of them offer plans that charge a monthly fee for a specific number of trades. Individual trades cost anywhere from $4 to $20. Online brokerages include Sharebuilder, Scottrade, E*Trade, and Fidelity.
    • Step 6

      Link your checking account to your brokerage account in order to fund your stock purchases. Now, it's easy to buy the water stocks or funds you are interested in.
    • Skill: Moderately Challenging

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