How To Start Investing In Commodities

There are many ways you can make money in today’s financial climate. Although, it might be a particularly good idea to look into how you can make money investing in commodities. However, as much as investing in commodities is fun and rewarding, it does come with the risks of a volatile and changing business. This is why it is so important to be clued up with all the facts and information you need to make the right decisions when it comes to commodity investment.

The Benefits of Investing in Commodities

Commodity investment is one of the most profitable types of investments an investor can make. This type of investment has features that make it more rewarding than other types like bonds, stocks and real estate. One feature is that commodity investment acts as a hedge against inflation. Some investors also prefer this this kind of investment as it is viewed as more exciting. With the supply or demand costs changing constantly due to factors like transportation costs and the weather, investors have to be ahead of the game and approach investments cautiously.

How to Invest

There are a few ways you can ease yourself into commodity investment. One of the best ways to invest at the moment is through Exchanged-Traded Funds and Exchange- Traded Notes. These offer an easy way of investing directly into specific commodities such as gold or agricultural commodities including corn and wheat by trading like regular stocks on all the major exchanges. This allows you as an investor to buy and sell these products simply and quickly. Another way of investing which is fairly similar is through Mutual and Index Funds. Like Exchanged-Traded Funds and Exchange- Traded Notes, this way of investing sticks to a certain kind of commodity. However the difference is that they don’t trade in stocks and are instead liquidated at their net asset value by the end of every day.

Managed Funds are another way of investing in commodities. This is done by investing your money into a fund run by a commodities broker with experience. It is then taken off your hands as the broker manages the money for a certain amount of time. Profits and losses made are then shared out fairly between you and the other investors involved in the managed fund.

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What to Invest in

Metals are some of the hottest commodities to invest in for 2013. Metals like aluminium, copper and nickel are all headed for price gains accorded to the Morgan Stanley report. The highest return however is actually predicted for silver. Its added demand for different industrial uses and its low price is likely to see silver outperform metals such as gold.

If you’ve already looked into sorting your finances with capital allowances or had a go at investing in stocks and shares, investing in commodities might be for you. Just remember to think carefully before investing in commodities because as previously mentioned, this type of market can offer highs and lows and carry risks. Once you have all the information you need to make sensible decisions, its then time to enter the exciting world of commodity investment.

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