When you think about commodity investing, you become afraid of trading commodity futures.
But how about commodity mutual funds and commodity ETFs.
Now for people who have never invested before, commodity mutual funds are the safest bet as they are the least risky.
But if you want to make high returns than you should be ready to take on more risk! First why invest in commodities? Did you come across this breaking news that gold explodes to new all time record high.
Gold stocks are up by 8% despite a bear market.
Do you know that gold prices have been on the rise for the last one decade and have now crossed the $1000 per ounce barrier.
Similarly, crude oil prices are also expected to jump up to $200 per barrel as the global economy recovers from the recession.
What we are witnessing is the start of a secular bull market in commodities.
Some say it had already started a few years back.
Well, in any case this secular bull market is supposed to last for a few decades.
The best way to profit from commodities is to invest in a good commodity ETF.
Now, ETFs gives you the benefit of diversification just like a mutual fund but they have lower fees something like 0.
7% as compared to 2-4% of the mutual funds.
Another additional benefit is that ETF shares can be traded just like stocks.
You can go both long or short on the shares of ETF anytime you want unlike mutual fund shares that can only be traded after hours.
So ETFs provide you with the benefit of both diversification as well as liquidity.
Commodity ETFs invest in a basket of commodities through the derivative securities based on commodities.
Take the example of commodity ETF launched by Deutsche Bank in 2006.
Now this commodity ETF mimics a commodity index based on a basket of six commodities: light sweet crude oil, heating oil, gold, aluminum, corn and wheat.
This commodity ETF invest directly in commodity futures contracts that are rolled over every month which can make this commodity ETF volatile.
You can find now many good commodity ETFs in the market that track individual commodities like gold, silver or crude oil.
But how about commodity mutual funds and commodity ETFs.
Now for people who have never invested before, commodity mutual funds are the safest bet as they are the least risky.
But if you want to make high returns than you should be ready to take on more risk! First why invest in commodities? Did you come across this breaking news that gold explodes to new all time record high.
Gold stocks are up by 8% despite a bear market.
Do you know that gold prices have been on the rise for the last one decade and have now crossed the $1000 per ounce barrier.
Similarly, crude oil prices are also expected to jump up to $200 per barrel as the global economy recovers from the recession.
What we are witnessing is the start of a secular bull market in commodities.
Some say it had already started a few years back.
Well, in any case this secular bull market is supposed to last for a few decades.
The best way to profit from commodities is to invest in a good commodity ETF.
Now, ETFs gives you the benefit of diversification just like a mutual fund but they have lower fees something like 0.
7% as compared to 2-4% of the mutual funds.
Another additional benefit is that ETF shares can be traded just like stocks.
You can go both long or short on the shares of ETF anytime you want unlike mutual fund shares that can only be traded after hours.
So ETFs provide you with the benefit of both diversification as well as liquidity.
Commodity ETFs invest in a basket of commodities through the derivative securities based on commodities.
Take the example of commodity ETF launched by Deutsche Bank in 2006.
Now this commodity ETF mimics a commodity index based on a basket of six commodities: light sweet crude oil, heating oil, gold, aluminum, corn and wheat.
This commodity ETF invest directly in commodity futures contracts that are rolled over every month which can make this commodity ETF volatile.
You can find now many good commodity ETFs in the market that track individual commodities like gold, silver or crude oil.
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