The adage goes something like ‘the best time to start investing is now.’ For some beginners, this can be painstaking, considering the volumes of information on the best investment with guaranteed returns. Other beginners will think this is an easy way to make a quick buck and plunge head first in the markets.
This post is for the amateur investor who is ready to make a strategic decision to safeguard their investment against exposure to unsustainable risk, but with enough latitude to pursue conservative opportunities that yield capital gains, and learn the ropes of the trade while at it.
Apart from the theoretical understanding of how the financial markets operate, it is imperative that a beginner gets a realistic feel of the different strategies investors employ in pursuit of opportunities in the markets.
The following is a detailed explanation of five best investment approaches suitable for beginners:
- ETFs
Exchange-traded funds (ETFs) offer a less rigorous opportunity for participating in the stock exchange. As a beginner, investing in ETF is ideal because an ETF pools together several assets including particular stocks, commodities and bonds, and the performance tracked against an index. ETFs allows you as the investor to trade several assets commonly as if they were a single stock. The diversification of the ETF enables beginners to access a broad portfolio of stocks and bonds providing the convenience and reduced risk. Consequently, the flexible nature of ETFs allows an investor to trade flexibly, with the choice of buying and selling at any time during regular trading hours.
- Mutual funds
Mutual funds are pooled investment vehicles ideal for beginners because of its two primary characteristics. First, a beginner is able to access the services of a professional trader in the name of fund manager despite the meek amount of capital, some as low as $25. Secondly, the investor is exposed to minimal risk because mutual funds, like ETFs, invest in a diverse asset class portfolio of stocks, commodities, and bonds across different markets and industries.
- Individual stock
After a detailed analysis of the past performance of an individual stock and the prevailing facts, individual stocks can offer a stable investment opportunity suitable for beginners. Caution should, however, be placed to ensure that the investment into the particular stock does not upset the risk tolerance level of your portfolio in case of a negative turn of events. Markets is not always predictable.
- Certificate of deposit
Depositing money in a bank over a specified term length with a fixed and guaranteed return of capital plus interest is a sound investment opportunity for a beginner. Certificate of deposits is insured and hence the capital plus interest are guaranteed to the investor at maturity. However, it is important to understand that access to this money is limited during the stipulated investment term length and may attract fees or loss of interest in case of withdrawal.
- High Yield Savings Account
This investment also entails saving for the sole purposes of earning capital gains from interest over a specified term length. However, unlike the certificate of deposit, the interest is not fixed and hence interest is according to the prevailing market rates. Funds in this account are however more liquid hence easily accessible.
5 Best Commodity Market Ideas
October 18, 2018
investment
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Commodity markets are a little different in terms of trading from traditional equity markets and thus, here are 5 best commodity market ideas that can work in India:
Cautious to negative on MCX crude
OPEC is finding it increasingly difficult to influence crude prices, which means that MCX crude could come under pressure. Moreover, Russia has joined the OPEC consortium in terms of cuts in crude supply.However, the US appears to enjoy a few clear distinctive advantages in terms of expansion in crude supply. Further, Trump has already withdrawn from the Paris Climate Agreement, which opens significant opportunities for the US for undertaking substantial expansion of its shale capacity. Thus, going cautious to negative on MCX crude.
Uncertainty factors could help MCX gold
The World Gold Council has announced that the gold demand for 2017 will not be substantially more than the previous year. Although India and China are the highest consumers of gold, gold prices will not be driven by consumption demand. Moreover, volatility in North Korea and Middle East coupled with other global factors could influence the direction gold prices takes. All these uncertainty factors could help MCX gold.
Using bounces-to-sell strategy for copper might help
The fact that copper has corrected for two weeks on-the-trot gives it a weak outlook. Thus, waiting for a bounce in price to sell could be a good strategy. Moody’s recently downgrading China doesn’t help copper prices either, since China contributes more than half of global copper demand.
Going short-term negative on MCX zinc could be a good option
Owing to environmental inspections, many zinc mines in the Hunan province of China were shut down. This led to subdued supply of zinc. Post completion of inspections, zinc supplies have started flooding the markets, which has brought prices under pressure as well. Moreover, strength of the US Dollar will weigh on MCX Zinc. Thus, going short-term negative on MCX zinc could be a good option
Long trade on NCDEX cumin on shortfall in supply could be a good option
With more than 70% of the world’s supply of cumin, India is the world’s largest producer of cumin. Other cumin producer such as Syria and Turkey are much smaller. Exports of cumin in India are expected to remain buoyant despite higher prices of the commodity. The commodity saw decent open interest gains, which again indicate towards pricing heading upwards. Therefore, long trade on NCDEX cumin on shortfall in supply could be a good option.