July 29, 2014

Commodoties Explained

Commodities simply refer to raw materials such as gold, oil and cattle. Investors may expose themselves to commodities as part of a diversified portfolio. Similarly, there is a case that investing in commodities can counter the risk of inflation within an economy as prices of commodities will increase should the price of products increase (because they are used in their production).

There are three main common ways to invest in commodities. One of the first is simply through purchasing shares in commodity focussed companies such as those involved in oil and mining. The second would be to purchase a fund that may include heavy exposure to commodity firms and the third would be direct exposure via an Exchange Traded Commodity.