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For better or worse, apps like DoorDash and Uber Eats have disrupted the food-delivery industry. Since their launch in 2013 and 2014 respectively, restaurants across the country have outsourced delivery services to independent drivers who use the apps to make extra cash.
During the pandemic, these services have seen demand like never before. For customers, the apps make ordering food from just about any restaurant as easy as opening their smartphones. For drivers, it’s almost as easy to land a delivery job hawking food from local eateries.
But before you download your next job, take some time to review the key differences between DoorDash and Uber Eats so that you can make the most of your delivery gig.

DoorDash vs Uber Eats: The Top Food Delivery Apps Duke It Out
The general premise of the two apps is almost identical: Customers place food orders at local restaurants. The apps alert drivers in the area with the order details. The first driver to accept the order picks up the food and drops it off to the customer. Simple enough, right?
Several differences are worth noting, though. Some minor and some major. We took a deep dive into those differences, looking at pay, vehicle and job requirements, available locations, driver reviews and more to help you make an informed decision before you start delivering.
And if it’s too close to call, you can always sign up for both to see which one suits you better.
Round 1: App Reviews

Chris Zuppa/The Penny Hoarder.
Because the apps are so popular, they’ve amassed more than 4.1 million driver reviews. Both companies require their drivers to use different apps than customers, a huge perk when trying to get a sense of drivers’ perspective. Worker reviews from Glassdoor are also included.
DoorDash Driver (Dasher) Reviews
Feedback from Dashers is overall mixed, but there’s a clear preference for the iOS version of the app. Trends in negative reviews across all platforms show that many drivers have trouble with glitches and crashes, especially Android users, and that the nature of the work takes a toll on their vehicles. Many negative reviews mention that DoorDash’s strict performance metrics are a hassle.
Workers reviewed DoorDash more than 760,000 times.
App Store (iOS) review: 4.7 out of 5.Google Play (Android) review: 3.3 out of 5.
Glassdoor review: 3.7 out of 5.
Uber Driver Reviews
More than 3 million drivers reviewed Uber. A caveat worth noting is that Uber has one driver app. That means it’s hard to get the opinions of only Uber Eats drivers because general Uber app reviews are mixed in. Overall, reviews are positive.
Trends in negative delivery reviews on Glassdoor indicate GPS issues and trouble contacting customer service. Several drivers mentioned problems with promotion and surge pay (bonus pay during in-demand times). Negative reviews regarding vehicle wear-and-tear are common.
App Store (iOS) review: 4.6 out of 5.
Google Play (Android) review: 3.8 out of 5.
Glassdoor review: 3.9 out of 5.
Round 2: Job and Vehicle Requirements

Carmen Mandato/ The Penny Hoarder
To become a Dasher or Uber Eats driver, you have to meet a baseline of requirements. Some are vehicle related and some are age and experience related.
DoorDash
To qualify as a Dasher you must be at least 18. Dashers need to have a valid driver’s license. There are no car requirements, but auto insurance is required. In some markets you can make deliveries on scooters, bicycles and motorcycles.
Uber Eats
To make automobile deliveries, the minimum age requirement is based on your local jurisdiction, plus at least one year of driving experience. Vehicles must be no more than 20 years old. Drivers must be properly insured and can use bikes and scooters in certain markets. The age requirements are higher for those who prefer two wheels — 18 for bicycles and 19 for scooters.
Round 3: Sign-Up Process
Becoming a delivery driver for DoorDash and Uber Eats is simpler than landing a part-time job. You can complete the entire process from your smartphone or computer.
DoorDash
You can sign up to become a Dasher on the driver app. You’ll have to consent to a background and motor vehicle check (and pass both). They could take as little as a few days, but err on the side of a week or two.
After passing the checks, you’ll need to select what type of “orientation” you want. The pandemic paused in-person orientations. Depending on your market you may need to request an “activation kit” instead. Receiving your activation kit may take an extra couple of weeks, according to driver reviews.
The activation kit includes a Dasher manual, a hot bag and a credit card, which is used to pay for orders. Once you receive and set up the card through the app, you can start accepting orders.
Uber Eats
For drivers new to Uber, you can sign up on the website or through the driver app. Because of the stricter vehicle requirements, the application requires more detailed information on your ride. A background check is also required, which may take three to five business days to process.
After the background check clears and your application is approved, you’re free to start taking orders. No orientation or additional equipment is needed.
If you’re a current rideshare driver for Uber, it’s easy to start delivering with Uber Eats. You simply opt in to Uber Eats orders through the driver app and start delivering without any additional screening.
Round 4: Pay and Tipping
The two apps handle pay a little differently, both in how you get paid and how you pay for customers’ orders when you pick them up. Neither company offers guaranteed wages (unless you live in California).
DoorDash
As of Fall 2019, the company switched to a payment model where Dashers earn a higher base pay per order in addition to keeping 100% of their tips. Previously, a customer’s tip would subsidize the Dasher’s base pay.

Dashers report earning between $11 and $15 an hour depending on location, but those earnings aren’t guaranteed. Pay is based on how many orders you accept per hour and how much customers tip you. DoorDash pays weekly through direct deposit, or you can access your earnings early through Fast Pay, for $1.99.
When picking up orders, you may be required to pay for the order using the company red card from your activation kit.
Uber Eats
Depending on your location, you can expect to earn $11 to $14 an hour on average. Again, those wages aren’t guaranteed because your earnings are based on orders and tips. With Uber Eats, you pocket 100% of your customers’ tips. You get paid weekly via direct deposit, or you can pay a fee to access your earnings early through Instant Pay for 50 cents.
You won’t be involved in the payment process for food orders. Partner restaurants are reimbursed directly by Uber.
Round 5: Available Locations

Aileen Perilla/ The Penny Hoarder
This one’s easy. Both services are available in most big cities in all 50 states.
Previously, DoorDash and Uber Eats ran driver support centers in major metro areas of most states. In 2020, many of these centers closed due to the coronavirus. Some still exist, but neither company offers a comprehensive, public list of remaining locations.
Final Round: Additional Perks
Promotional offers are popular with both DoorDash and Uber, but they’re temporary and vary by location. Aside from sign-up bonuses and referral codes, here are a couple perks that are here to stay.
DoorDash
A few perks unique to DoorDash include grocery delivery options, automatic insurance coverage and health care services.
After you’re screened and accepted as a Dasher, you can choose to deliver food in any city where DoorDash operates, meaning there are no hard location requirements. The company also launched grocery delivery services in some Midwest and West Coast areas.
Dashers also get supplemental auto insurance and occupational accident insurance for accidents or injuries that fall outside your current auto insurance. The insurance plan covers up to $1 million in medical costs, a weekly payment of $500 for disabilities and $150,000 to dependents for fatal accidents. Coverage is automatic. There are no deductibles or premiums.
While DoorDash doesn’t offer health insurance, the company does partner with Stride Health, which provides free health care advising and assistance to Dashers who need help finding affordable insurance plans.

Uber Eats
Uber Eats drivers get a variety of discounts and may be eligible for Uber Pro perks.
All Uber drivers receive discounts for vehicle maintenance and phone service plans. Uber also partners with Stride Health to provide health plans and tax advice. Drivers automatically receive supplemental auto insurance, which covers up to $1 million in damages. There’s a $1,000 deductible before benefits pay out.
Uber Pro perks have recently expanded to all of Uber’s markets across the U.S. Only top-rated drivers receive Pro perks like tuition and gas reimbursement, and the program is designed for Uber drivers primarily, not Uber Eats drivers.
If you drive for both Uber and Uber Eats, your food deliveries may apply to Uber Pro, but Uber-Eats-only drivers aren’t eligible.
Final Decision in DoorDash vs Uber Eats
Ding! Ding! It was an even match-up. Uber Eats and DoorDash were neck and neck throughout. No knockout punches. A good few jabs by DoorDash’s insurance coverage and grocery options and a couple of hooks by Uber’s overall ratings and ability to switch to ridesharing.
The decision goes to our judges. (That’s you.)

Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, remote work and other unique ways to make money. Read his ​latest articles here, or say hi on Twitter @hardyjournalism.

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Having trouble paying your tax bill? Falling behind on taxes can be scary, but you have options to get caught up. One common, albeit last-resort option, is an “Offer in Compromise”. In the 2019 fiscal year, the IRS accepted 17,890 offers from American taxpayers who needed help catching up on their taxes, totalling $289.4 million. 
If you’re considering making an Offer in Compromise, you’ll need to know what it means and how to proceed. Here’s everything you need to know to determine if this strategy is right for you.  
What Is an Offer in Compromise?
An Offer in Compromise is an agreement you make with the IRS to settle your tax debt for less than the full amount. It’s used in cases where taxpayers would experience significant financial hardship if they paid the full tax amount that’s owed. 
Qualifying for an Offer in Compromise isn’t easy. The IRS will assess not only your ability to pay the debt but also your income, expenses, and any equity you have in your assets. If it approves your offer, there are two different payment options (monthly or lump sum) available to help you customize your repayment schedule to your needs. 
Offer in Compromise Eligibility
Here’s what the IRS looks for to determine eligibility for an Offer in Compromise: 
You can’t be in an open bankruptcy proceeding.
You have to be caught up on filing all of your federal tax returns. 
You need to have made all of your required estimated tax payments. 
You’ve submitted all federal tax deposits for any employees. 
Once you’ve met the basic criteria for eligibility, the IRS will review your offer. It typically approves offers where the amount you’ve suggested is more or less the maximum it could collect from you in what it determines to be a “reasonable” amount of time. 
How to Submit an Offer in Compromise
Submitting an Offer in Compromise can be complicated so many people prefer to use a tax relief company to help. If you go that route, be sure to compare the best tax relief companies online before choosing one. Review each company to ensure it has a good track record, excellent customer service and low tax relief service costs. 
Although you can go through a tax relief company to submit an Offer in Compromise on your behalf, you can choose to submit your Offer in Compromise on your own which can save you money. Here are the basic steps to preparing an Offer in Compromise for the IRS. 
Step 1: Gather Important Documents
You’ll need to provide many personal details to complete your Offer in Compromise. First, make sure you have documents that show your total financial situation. You’ll want to have all aspects of your finances documented, such as cash, investments and assets, available credit, debt and your income. 
Also, if there are others in your household who contribute to expenses you’ll need to provide information about their income and average expenses.
Step 2: Complete Form 433-A (OIC) or 433-B (OIC)
Form 433-A (OIC) is for wage earners and those who are self-employed. This form helps the IRS calculate what it believes is an appropriate offer based on your income, expenses and earning potential. Keep in mind, if you’re married, but living separately, your spouse will also have to file the same form. 
Form 433-B (OIC) is necessary to fill out if you own a business or corporation, or you’re a single-member LLC, taxed as a corporation. 
Step 3: Attach Supporting Documents
You’re not limited to only the information on the form, you can also attach additional documentation that shows your financial circumstances. Each form has a list of the specific documents you need to attach for support. 
For example, with Form 433-A (OIC) some of the supporting documents you need to attach are copies of:
Current pay stubs or earning statements
Individual bank statements from the last three months
Statements for each investment or retirement account you have 
Step 4: Complete Form 656, Offer in Compromise
In IRS Form 656, you’ll decide which tax years, and the type of tax, you’re going to offer a compromise for. You’ll also need to state the amount and how you’ll make payments. 
Step 5: Include Payment
There are two separate payments you’ll need to make with your offer — the application fee, which is $205, and your initial payment. 
Your initial payment depends on which repayment method you’re choosing. If you’re opting for monthly payments, then you’ll need to send the first month’s amount. If you’re opting for lump sum payments, you’ll need to send 20% of the total amount. If your offer is rejected, this initial payment will be applied to your tax debt. 
You can send both payments by personal check, cashier’s check or money order or through the Electronic Federal Tax Payment System. You should make them payable to the “United States Treasury.” 
There’s only one scenario when you don’t have to send any funds with your application  — that’s if you qualify for Low-Income Certification. In this case, your application fee is waived and you don’t need to send your initial payment. 
Step 6: Mail Your Application
Before you drop your application in the mail, be sure to make a copy of the entire package to keep for your records. It’s a good idea to send any sensitive documents, like an Offer in Compromise, via certified mail so that you can track the offer and retain proof of delivery.
What Happens When Your Offer Is Approved
If your Offer in Compromise is approved, you’ll have to continue to file taxes and keep up with estimated payments that are due in the future. An approved Offer in Compromise doesn’t give you any tax immunity on future earnings, it simply helps you resolve tax debt from past earnings. 
After receiving written confirmation that your offer is approved, you’ll need to review the Offer Terms, which will be listed in Section 7 of Form 656. Then, you’ll can start making payments. 
If you opted for lump-sum payment, you’ll have already submitted 20% of your total payment with your initial offer. After that offer is approved, you’ll need to pay the remaining balance in a maximum of five payments. 
If you decided to make periodic payments you’ll owe monthly installments to the IRS, which you must make until you’ve fully repaid your debt up to the amount in your accepted offer. 
What to Do If Your Offer Is Denied
Not every Offer in Compromise is accepted by the IRS. If yours is denied, you still have options. 
Here’s what to try next:
You have 30 days to appeal your rejection, which you can do using Form 13711.
Set up an installment agreement with the IRS that allows you to make monthly payments throughout a set term. This can stop any collection activity against you by the IRS. 
Apply for a payment extension using Form 1127.
Request “Currently Not Collectible” status, which could temporarily defer your tax bill until your finances improve.   
In addition to these strategies, you can also work to improve your finances to make it easier to repay your tax debt. If you don’t already have a budget, create one that includes debt payments. 
Once you’ve cut expenses and directed those funds toward repaying your tax debt, consider also increasing your income to help you tackle your debt faster. 
Even though paying your total tax bill might seem daunting, remember that it’s possible to fix financial problems — you won’t stay stuck forever. The key is determining the right plan for you and then staying consistent as you work toward your goals.  […]

Although enduring the pandemic has been stressful to say the least, I have learned a multitude of lessons I’ll never forget. One of the biggest is that, like it or not, I’m not cut out to homeschool four kids while trying to work at home. Most of all, though, the pandemic has reinforced my feeling of gratitude for the life I live — and the life my family lives.
For example, when schools began shutting down and the whole country went into lockdown, neither my wife, Mandy, or I had to miss work or struggle to find childcare. When I work on my blog, my podcast, and other ventures in my home office, my wife already stays home with the kids and has done so for several years. 
And when the economy stalled and the stock market dropped like a rock, we never had to wonder how we’d pay our bills or what the future might hold. After all, we have a fully stocked emergency fund, and have plenty of passive income streams that aren’t tied to an employer or the stock market on any given day.
The bottom line: The pandemic has reminded me all I have to be grateful for, including the peace of mind that comes with financial independence.

Teaching My Kids About Financial Independence
Anyway, part of me has always worried that my kids wouldn’t get to learn the same financial lessons I did — at least, not in the same way. Because of the situation we’re in, my kids have never really lived in a modest home, and they have never had to go without. They have never been in a situation where we are trying to stretch the groceries for another week until payday, and in fact, the pandemic has made us rely a lot more on takeout and food delivery than we normally do.
Regardless, I recently took some time on one of our homeschool days to map out what it takes to run and pay for a household for my kids. 
Writing It All Out
On a giant whiteboard in my office, I created a list of most of our household bills — our mortgage payment, transportation expenses, phones, gas, insurance, utilities, and all of the taxes we pay. In another column, I wrote out a rough example of the amount of income it would actually take to cover those bills. 
From there, I talked with the kids about our household wants, or stuff they prefer to have. My kids went ahead and added shoes to the list, an Xbox and some dolls. 
At one point, the kids started asking questions about where the money for our bills actually comes from. I explained that, while I continue working on my podcast and blog and other business ventures, the majority of our income is mostly passive — as in, I am not actually working for it and I am no longer getting paid by an employer.
And in that moment, I began explaining to them my thoughts on financial independence — what it means to me, and how we actually got to that point. 
While my kids were sick of dad teaching and barely listening by then, they did have some thoughts on financial independence. I explained to them that, if they could save a ton of their income in their early working years, they could invest in passive income streams they could rely on for decades after that. 
We also talked about how secure it can feel to have enough money stashed away to get by, and to not have to rely on the whims of an employer or a J-O-B to stay alive. 
How I Realized We Were Financially Independent
All of this got me thinking about when I knew we were financially independent, and the “aha moments” I had along the way. After all, our journey to financial security didn’t happen overnight, even though sometimes it does feel that way.
But before I share how I knew we didn’t need to worry about money, I want to explain what I think financial freedom really is, based on a note I wrote on my whiteboard for our kids. 
What Financial Independence Is (and What It Isn’t)
For me, financial independence is not about making the most money you absolutely can, and it’s not about how much is in your bank account, the car you drive, or the size of your home. 
Instead, financial independence is about choice. 
Based on the way I interpret the FIRE movement, financial independence is about being able to choose where you work and what you work on, having the ability to spend your free time how you want, and living life on your own terms. It’s about not having to go to a job you hate, and to still have the money you need to pay bills and live comfortably, regardless.
Further, financial independence means being able to have the freedom of choice without any worry, without any stress, and without any anxiety — at least when it comes to paying bills.  
My Aha Moments
So, what are the “aha moments” that helped me realize we had been blessed with all we need — that we are financially independent?
In reality, it has been a lot of small things over the last decade or so — things like being able to rent two hotel rooms or a large Airbnb each time we travel, and not having to worry whether we can afford it. After all, I have four kids, and my wife and I don’t want to sleep in a hotel room stuffed six-people deep. 
Another big moment we had was the first time my wife and I maxed out our old Roth IRA accounts while also fully funding our 401(k)s, which happened early in our marriage. 
Then there was the year we started building our first “dream house,” which we lived in before the one we live in now. Our “starter home” was around 1,900 square feet and we lived there for quite a while. But we started building our 5,000 square foot dream house right before the birth of our second son — we even put in a pool shortly after that. 
This was when we were in our early 30’s, and building at that time just seemed like a dream come true. We even started building our new home before we sold our old one, which was only possible because we had our financial ducks in a row.
Other key “aha” moments along our journey to financial independence included:
The many times I turned down lucrative job offers and opportunities so I could continue pursuing my own dreams
When I realized I could take two weeks off to drive my family to the Grand Canyon in an RV — and I did it!
When I’ve made more money in a month than my parents used to earn in a whole year (since my parents topped out at around $40,000 to $50,000 per year during their working years)
Realizing I had the cash savings to purchase my childhood dream car (a yellow Lamborghini!), if I really wanted to
The time I sold a minority stake in one of my businesses and was handed the largest check I have ever received to date
The first time I paid $400 for a pair of Jordan shoes with no regrets or stress, which actually happened just a few years ago!
Funny enough, I sent my wife Mandy a text, for research purposes, asking when she first felt financially independent. Her answer was totally different than mine. 
Mandy says that she felt like she no longer needed to worry about money when we reached one year of expenses in our emergency savings account.
I have to agree with her, because that milestone did give me a lot of peace of mind. After all, having 12 months of expenses in an emergency fund means a lot could go wrong with our finances and we would still have the time and space to figure it all out.
3 Key FIRE Principles and How You Know You’re On Track
If you’re pursuing financial independence but progress feels slow, know that your path to financial freedom will have a lot of bumps along the way. If you’re like me, you might also find that you’re inching toward financial freedom in spurts, and that it doesn’t all hit you at once. 
The key for those seeking FIRE is being on the lookout for those “aha moments” that tell you you’re on the right path. No matter what anyone says, you won’t become financially independent overnight. Instead, you’ll probably hit several different stages over the months and years it takes to get there.
Not only that, but you should strive to adopt the right mindset for FIRE. For the most part, this means being willing to think differently about how the world works and how it should work, and being open to going your own way.
What are the key principles of FIRE — or the key mindset changes that can get you there? Based on my personal experience, here’s what I think they are.
Key Principle #1: Gratitude for What You Have
In my opinion, being grateful for what you have (and what God has provided) is one of the most important steps anyone can take. Even if things aren’t really going your way, and if life seems bleak and miserable at times, there is always something we can be grateful for. 
With that said, I recommend being grateful and hungry — as in, don’t be so grateful that you become complacent and stop pushing for more in your life. 
Continue to entertain the idea that there is always something else you can learn, more experiences you can have, and more wisdom to obtain by trying new things. And if you try something and fail, look for the lessons you can find in that failure and be grateful you had the chance to learn them. 
Key Principle #2: Flexing Your Bold Intentions
Another key principle of achieving financial independence is being willing to share your goals with the world — loudly and without hesitation.
In your own life, you might’ve noticed that people who are pursuing FIRE can’t stop talking about it. This is because FIRE enthusiasts usually have one important thing in common: they’re brave enough to put their bold intentions on display no matter what anyone thinks.
Let’s say you have the bold intention of achieving financial independence and retiring at 35. Why not take that goal and post it to your Facebook page? Start sharing it with your family, and don’t forget to tell your friends. 
Chances are good that you’re probably going to get a lot more criticism than support from your peers, but who really cares? 
Most people who pursue FIRE actually don’t care at all what other people think. That’s part of the reason they’re able to live differently, save a large percentage of their income, and stop trying to keep up with the Joneses in the first place.
Key Principle #3: Full Release of the Past
Finally, you have to make sure your future is bigger than your past — as in, don’t let your past mistakes define who you are today and who you can become.
I know from experience that it’s far too easy to focus on all of the mistakes you’ve made and opportunities you’ve missed out on. Trust me, I’ve made more than my share of bone-headed mistakes that could’ve easily derailed me, yet here I am. 
The key for anyone pursuing FIRE is having some humility for the situation while never letting your past mistakes hold you back. You have to be willing to put yourself out there again and again, knowing you might fail. The thing is, every failure has a lesson, and sometimes those lessons lead you to something great right around the corner. 
Maybe you skipped saving for retirement early in your career, and you feel behind from where you should be. Although you definitely missed out by not getting started early, you can only control the steps you take to reach your goal right now.
Perhaps you made a poor investment and lost money at one point, which is something most investors have done at least a few times. Instead of dwelling on that mistake, you have to learn to cut your losses, find the lesson in the mess, and move on. 
Why? Because the alternative isn’t moving forward, and that won’t get where you want to be.
The bottom line: Let go of the past and take stock of where you’re at now. From there, figure out a plan to reach your goals, and don’t stop until you get there. […]

Investing in oil can have a major financial upside, which is why it’s a popular choice for many investors. But, it’s not without its risk, as the process can not only be complex but oil prices are prone to some volatility.
If you want to invest in oil, it’s important to do your research and find a method of investing that matches your risk tolerance. Here’s what to know about investing in oil and how to decide if this is the right investment vehicle for you. 
Why Invest in Oil?
Oil can be a volatile stock which is one of its disadvantages that scares some investors off. However, it has many upsides,too. 
Oil allows you to diversify your portfolio, which is highly recommended when creating a long-term investment strategy. Many oil stocks also pay dividends. For example, in the third quarter of 2020, Chevron stock yielded a dividend of $1.29 per share. 
Then, there’s the potential for tax write-offs. Oil investments present unique tax advantages in the United States. Through tax exemptions and offsets, oil investors can avoid taxes they’d otherwise have to pay if they invested in alternative industries. 
Despite this, oil isn’t the right investment for everyone. The volatile prices, high risk, environmental impact, and relatively high financial barrier to entry are some drawbacks to consider before jumping into an oil investment. 
Pros
Cons
Diversify your investments
Volatile prices
Potentially obtain tax write-offs
Environmental impact
Pays dividends
High cost of entry
How to Invest in Oil
There are several ways to get started investing in oil. When you’re evaluating your options, be sure to assess the risk level of each, to make sure it matches your own risk tolerance. Also, if you have any specific tax needs you’ll want to consider the tax advantages of certain investments and whether these can benefit you. 
Master Limited Partnerships (MLPs)
MLPs, which are most often found in the energy industry, are entities that will typically provide or oversee the supplies, materials or staff needed for other businesses in the energy industry to operate. 
Think of companies that provide services to the oilfield, transport pipelines, or help oil companies coordinate their operations. They’re structured as partnerships, not corporations, for tax purposes. This means they pay tax at what’s often a much lower rate.
MLPs are relatively low-risk, making them a popular choice for those who take a long-term approach to investing, or for estate planning purposes. 
Exchange-Traded Funds (ETFs)
Want to diversify your portfolio by adding oil, but aren’t prepared to buy oil itself? ETFs offer an alternative, and potentially less costly, method to integrate oil into your investment strategy. Since ETFs are essentially pre-packaged, you don’t have to make multiple purchases in oil stocks to round out your oil exposure. 
Having one transaction also helps reduce the fees or commissions you’ll pay. If you’re trying to invest a small amount of money, oil ETFs could be the way to go. 
You can trade ETFs just like you would any stock in your portfolio, so you don’t need a broker-dealer to help. This gives you greater control and makes overseeing your own portfolio easier. Plus, with oil ETFs, you don’t incur capital gains tax until the fund is sold. 
Think you want to add oil ETFs to your portfolio? Conduct thorough research first by paying attention to the price of oil. Target specific ETFs and note their behavior as oil rises and falls. When you have an understanding of how each ETF you’re looking at reacts to marketplace changes, you can make your oil purchase based on your projections.
Oil Futures
Oil futures might be a good fit, if you want an investment that’s more directly in line with the crude oil market. Futures are a type of financial contract that stipulates a transaction will take place at a set time, date and for a certain price. You can buy futures in many industries, including oil. When it comes to crude oil futures, the contracts specify how much crude oil will be sold on a certain date and at what price.
Futures contracts cover 1,000 barrels at a time. When you take part in purchasing futures, it’s not expected that you’re going to one day be the owner of a barrel of oil. You purchase futures through a commodities exchange, selling before the expiration date on the contract. 
Even a small change in oil prices can have a relatively big impact on your payout — if oil is at $45 a barrel and rises to $46 when you sell, that’s a $1,000 increase for just one futures contract.
Keep in mind, you’ll need a margins account to trade futures. Usually your margins account needs a minimum balance so that you can pay any losses you might incur at the close of the contract. 
Direct Participation Program (DPP)
If you want to make a direct investment into activities like the exploration of oil you might want to consider a Direct Participation Program. These are long term, pooled investments that rely on passive management, meaning they aren’t traded. 
With a DPP, all of the members contribute their funds to be invested by the general partner. Whereas funding an exploratory drilling program might otherwise be only available to wealthy individuals, participating in a DPP let investors — who otherwise wouldn’t have access to a lot of capital — participate with full exposure to the risk or reward. 
In oil, there are several types of DPPs:
Exploratory drilling program
Developmental drilling program
Working interest program
Rework program
Since DPPs are often incorporated as partnerships they enjoy tax benefits over corporations. However, DPPs aren’t publicly traded. This means you can’t simply purchase a position in one, like you would when buying a stock. 
You might also have to meet a certain income level or have a certain amount of assets to invest. Depending on the state, you might even need to be an accredited investor to participate in a DPP. This is because DPPs are not a liquid investment. Once you invest your money in a DPP, you’ll need to be prepared to leave it there for five to 10 years. 
Mutual Funds
Mutual funds take investments from many investors and use the collective total to secure assets, like stocks and bonds, related to the theme of the fund. They’re managed by professional mutual fund managers who research the market, and then either aggressively try to beat it or make safe investments that keep pace with the overall market. 
Although it can be hard to diversify your portfolio by yourself, especially if you have limited money to work with, participating in a mutual fund can help you achieve diversification. 
When it comes to oil, there aren’t specific oil mutual funds to invest in. Investors typically participate in mutual funds related to oil, such as energy funds or natural resource funds. Through choosing the most appropriate funds in these industries, you’ll get some exposure to oil.
The Bottom Line
Participating in oil — whether directly or indirectly — can be a smart way to diversify your portfolio. Keep in mind, while each investment vehicle gives you the opportunity to participate in the upside of the market, it also comes with risks. Make sure you understand your own appetite for risk when it comes to your money and choose your oil investments, accordingly.  […]