Why Do I Need a Firm to Invest in Commodities?

You technically don’t need a firm to invest but the complexities of the investment landscape and the volatility that can come from global factors are nearly impossible for a person to keep track of and/or make sense of.

Here we’ll explore reasons why you should work with a firm when investing in commodities.

1. Diversification of your portfolio

One of the main factors that determine the success of your financial plan is diversification. Diversification with regards to an investment portfolio means investing in assets that are not correlated to each other across different asset classes. Many investors would be diversifying in five major asset classes which include cash, shares, fixed income, real estate, and gold. In times of increased volatility in the markets, you are either holding on to cash or investing in gold. Gold is considered a safe haven for investment in volatile periods. However, in reality, the gold in your portfolio is your investment in a commodity and just like all the other commodities the returns from it are independent of the returns generated by stocks and bonds.

2. Provide a hedge against inflation

Inflation is the general rise in the price of goods and services over time. For any investment to be successful, it is important that the returns generated beat the rate of inflation.  Higher inflation erodes the real returns generated by your investments in stocks and fixed income securities. However, in the case of commodities, higher inflation relates to the higher price of commodities. So, unlike other investments, your commodity investments will result in strong performance when inflation is high. So when inflation is constantly on the rise, investing in commodities will provide a hedge against inflation.

3. Improve your returns

The prices of individual commodities fluctuate significantly due to several factors such as supply & demand, the impact of natural disasters, government intervention from outbreaks, exchange rates and the global economic health.  The rise in infrastructure projects in developing countries globally can also have a positive impact on commodity prices.

Partnering with a firm who does proper research and effective implementation of investment strategies in commodities can help investors improve the overall returns on their portfolio.

Contact Us Now for More Information or Talk About Investing with TCI Partners

Call us at 470-363-4080

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