Commodity Mutual Funds

Many people want to invest in a commodity mutual fund but have no idea where to start. There are many options available, which is why some investors get confused with all the options available. Don’t panic. There are several high quality investment options that aren’t complicated that are available.

One of the best options is just simply buying an ETF. What makes them great is that they are freely-traded. You don’t need to sign up directly with the mutual fund company to buy them. You can just buy a share of the fund like you are buying a stock of a company. There are several of them available; the biggest and most reputable companies include PowerShares and iShares. They are also good in that that most of them are passively managed (designed to match an index and thus low cost) and certain tax benefits that regular mutual funds do not have.

To buy an ETF just log into your stock brokerage account and buy one. Do some internet research to find an ETF that particularly suits your needs. Try using a site like Seeking Alpha or Yahoo Finance.

Don’t despair if you don’t already have online stock broker. The market is extremely competitive. Most brokers offer big incentives for new customers; everything from discounted or free stock trades to signup bonuses. Be sure to look out for them.

It is recommended that unless you are very experienced in a financial markets to buy a broad-based commodity fund that invests in several securities. Commodity markets are frequently are significantly more volatile than stock or bonds in general. So while you might think oil will make a great long term investment, there might be a short term “dip” that could have a huge effect on your portfolio. Like with any financial instrument, diversity is key.