The easiest answer for this question is: anyone who doesn?t mind being in a riskier market. In fact, the commodities market is reputed to be so volatile that fortunes can be made or lost in a matter of minutes or hours, if you do not know what you?re doing. To get a better understanding of investing in the commodities market, let us take a look at some of the basics.
What is a commodity?
A commodity is anything that can be bought or sold. Examples of a commodity can include oil, gold, oranges and currency. When you invest in commodities, you?re basically betting on what the market will do. You?ll bet that the price of oranges will rise or that the value of the dollar will fall.
Investment strategies in commodities
The next insightful element with reference to this subject matter. Most financial experts don?t recommend investing anything in the commodities market that you can not afford to lose. It?s not the investment type for someone who wishes for a safe investment for their retirement account, unless you put your money into a managed account.
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But nevertheless, if you don?t mind higher risk in return for the greater chance of higher returns, commodities might be a good option. Commodities are a great way to use a portion of your portfolio in higher risk/higher return investment, but should never be used as a major segment of your portfolio.
Safe investing in commodities
If you really want to take your turn at commodities investment, but want to minimize your risk, take a look at commodities funds. Because these funds include a mixture of different commodities, the risk may be minimized by the very nature of the portfolio.
If it?s riskier, why would anyone invest in commodities?
The return, when someone wins in the market, can be extremely high. There have been a number of millionaires made through commodities trading and will do so again in the future.
At the same time, it has long been understood that the commodities market is a great hedge against inflation. When inflation unexpectedly hits, the commodities funds tend to do a lot better.
As a final point, commodities are always in demand. Gold, oil and currency will always have a market because we need them. They?ll never become outdated and the demand will never disappear.
Investing in commodities may be the perfect investment for anyone who does not mind using a small portion of their portfolio in higher risk activities in order to achieve a higher reward. If you don?t have the time to follow markets and industries on a day to day or hour to hour basis, checking out the commodities funds are the next best thing.
Caterina Christakos is an experienced investor and instructor with World Capital Institute. Ever imagined an exciting career as a stock or commodities broker. Make the dream a reality here: [http://www.worldcapitalinstitute.com]
Source: http://i-commoditiesfutures.com/whos-investing-in-commodities/
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