What Are Commodities? And How do they Work?

Assalamu Alaikum girlie! 🌺

I’m sure you’ve heard statements like “gold is a great investment” before. Gold is one of many commodities people invest in to build wealth📊

Today, we’ll cover:

• What are commodities?

• How To Make Money Investing in Commodities

• How to Vet a Commodity to Invest In

What Are Commodities?

Commodities are basic goods that can be bought and sold, like gold, silver, oil, natural gas, and agricultural products (think wheat, corn, and coffee).

They are tangible assets and play a crucial role in the global economy.

How To Make Money Investing in Commodities

1. Price Appreciation: If they buy low and sell high or keep it for a long time! If the price of a commodity increases, you can sell it for a profit.

2. Diversification: Commodities often move independently of stocks, so they can help balance your portfolio and reduce risk.

3. Inflation Hedge: Some commodities can be a good way to protect against inflation because their prices tend to rise when inflation is high.

How to Vet a Commodity to Invest In

1. Market Demand: Research the current and future demand for the commodity. Is it in high demand? What are the market trends?

2. Supply Factors: Understand the supply side. Are there any disruptions, like natural disasters or political instability, that could affect supply and drive prices up?

3. Economic Indicators: Keep an eye on economic indicators like inflation and economic growth. These can influence commodity prices.

4. Storage and Transportation Costs: Some commodities require significant storage and transportation costs. Factor these into your investment decision.

5. Historical Performance: Look at the historical price trends of the commodity. This can give you an idea of its volatility and potential for growth.

6. Regulatory Environment: Be aware of any regulations or policies that might impact the commodity market. This could include trade policies, environmental regulations, or taxes.

Examples of Commodities to Consider

1. Gold: A classic safe-haven investment, often used to hedge against inflation and economic uncertainty.

2. Oil: Vital for global energy, its price can be influenced by geopolitical events and supply-demand dynamics.

3. Agricultural Products: Wheat, corn, and soybeans can be profitable, especially if you understand the cycles and demands of the agricultural market.

4. Natural Gas: Used for heating and electricity, it’s a commodity with growing demand.

And that’s another investment vehicle some include in their portfolio to build wealth.

Got any questions? Schedule a 30-min call let’s get you straight! (It’s FREE- no strings attached)

I’ll catch you next week Inshaa Allah

Spend wisely and build wealth,

Fatimah ✨