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Commodities' full potential is not often realized. The reasons include fear of loss, lack of experience, and not utilizing resources. Many investors prefer commodities because they find it satisfying and they enjoy the challenge of getting the most out of their investment. The benefits of commodities caused investors to search for and find an alternative. Commodity futures and options is the alternative that came to being. It was too impractical to transport and store commodities when physically buying and selling commodities like the following: * Livestock * Wheat * Coffee beans * Steel * Oil * Natural Gas With commodity futures and options it becomes practical to buy and sell what is impractical to buy, sell, transport, and store. Commodity benefits can be realized when an investor sees that commodity-related equities don't always reflect changes in the price of commodities. The financial structure and unrelated business can affect the returns on a commodity-related equity returns. Past commodity index performance won't always predict the benefits and profit of commodities. This occurs when the accounts are dependent on a manager's skills at choosing a particular commodity. Some investors are drawn to commodity futures index and others are drawn to actively managed futures accounts. The commodity index return reflects a passive exposure to a many different commodities. Some investors prefer this because it is not dependent by a manager's judgment call. The index is the result of 19 different commodities that are tracked and combined with preset rules. The commodities are related, but not tightly tied together. The returns from the index tend to be less volatile than the returns on commodities individually. This is one of the appeals of a commodity index. The commodity indexes have been around for decades, so that there is extensive historic data to be used for research. There is less potential for profit though. An investment portfolio needs to be diversified, and the commodities that are in the portfolio should be diversified. Investors that diversify their portfolio prefer commodities from different categories. The draw of this is the variety of the commodities. Different categories of commodities include the following.
* Energy-oil, coal, natural gas, propane * Agricultural-grain, sugar, coffee beans, cotton, cattle * Metals-copper, gold, silver * Miscellaneous-wood, milk, juice, currency, oil (vegetable, nut) Having a diversified commodities investment portfolio will provide stability with commodities as well as adding to the over-all diversity of an investment portfolio. When investing in commodities, New Century International can handle your investments of $5000 or more (no maximum investment restrictions). Contact one of the experts today to start investing and find out more why so many are drawn to investing commodities.
Read More about The Draw of Commodities. For more information about ForEx and commodities trading, contact one of our experts today.
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