Commodity trading is an integral part of any portfolio, no matter how great or small your net worth is.
Commodities can act as a buffer to the rest of your investment portfolio to help you survive any economic downturn. This is why you should consider commodities in your investment portfolios.
Diversification of Investment Portfolio
Investment pundits will tell you that portfolio diversification is one of the foundations of wealth creation. We agree. Why risk all your money in one place? Some investors like to keep things simple and stick to one or two investment types. We think that’s too risky. We also know it’s essential to balance low-risk and high-risk holdings when you’re diversifying your investments.
Commodities may be an essential tool for investors to broaden their investment portfolios beyond standard assets. Because commodity prices tend to fluctuate in the opposite direction of stock prices, many investors depend on commodities during moments of market instability.
Commodities trading used to take a large amount of effort, money, and knowledge, and it was mostly confined to experienced traders. Nowadays, there are more ways to participate in commodities markets.
Inflation is defined as the pace at which the currency value falls and, as a result, the overall level of costs for services and goods rises. Inflation is a natural phenomenon in a system that central banks cannot control. Most currency investors and traders employ inflation hedging to safeguard against expected currency price losses.
Trading in commodities allows you to survive inflation. During periods of high inflation, commodities demand rises, guaranteeing your investment profits from the price increase. In addition to being an excellent hedge against inflation, Commodities are also a good counter against the ongoing inflation.
Potential Return Improvement
Most amateur investors and day-traders believe that making money is by buying low and selling high. It’s a logical approach. After all, while buying low and selling high have resulted in significant cash accumulations, this is not how experts achieve success.
Due to the obvious underlying worldwide need, commodity trading can assist you in maximising profits. While commodity values are subject to variations due to fluctuations in rates of interest as well as global instability, robust demand means that commodity returns are generally favourable.
Trading in commodities is something that has been occurring for hundreds of years. Despite the immense popularity and long history, new commodity traders will be surprised at the variability of available instruments.
Commodity trading can be approached in a variety of ways. One strategy is to buy varied amounts of tangible raw commodities, including precious metal bullion. Investors can also use Exchange-traded products and futures contracts that directly follow a specific commodities index. These are high-risk, complicated investments that experienced investors should only undertake.
For investors interested in joining the commodities’ marketplace, ETFs (Exchange-traded Funds) and ETNs (Exchange-traded Notes) are choices.
Exchange-traded Funds and Exchange-traded Notes move like equities and enable investors to benefit from commodity price swings without directly investing in commodity futures; wherein there is an agreement for the fulfilment of the trade at a predefined price at a specified date in the future.
Commodities can be invested through options as well, wherein the traders have an option to execute the trade at a predetermined price in the future without any obligation to fulfil the same. Unlike futures, the trader can forego the deal under an option if it doesn’t suit his interest.
Why Choose Sharekhan?
Welcome to Sharekhan, where our world is all about empowering individuals and small businesses in their quest for growth and success. We provide products and services through which you can add value to your hard-earned wealth by increasing your income, savings or investments.
The key to enhancing your business ventures is having access to a complete range of trading products and technologies in an interactive and collaborative environment.
To this end, we set up Sharekhan as the one-stop shop for all your share trading. Trade online and enjoy hassle-free investing through our simple and convenient system that allows you to buy, sell and view all your share accounts in one place.
The dashboard shows all your portfolio values in real-time and adds a personal touch with corporate news, research reports, share price charts and more, delivered straight to your inbox. We’ve got everything covered!
If you are looking for a place to invest and want to engage in a long-term relationship, Sharekhan is the right place to come. With us, your money will be safe, and we will provide financial advice in a way that suits your needs.
We welcome you to explore our website, browse through our plans and view our advertisements to understand more about us and employ our services.