Retirement Investing – Commodities

Devoting some time to your investment portfolio each week can be a great hobby throughout retirement. Having a little more time to spend researching the best places to put your money, you can get even more aggressive with your portfolio and keep the money coming in consistently.

 

One asset class to consider putting your money into is commodities. Don’t be intimidated, they’re as simple as comparing Medicare supplement plans. Commodities are essentially raw materials or agricultural products, you probably mostly think of them as gold, silver, and oil. And if you know anything about gold, silver, or oil you probably know that they’re generally very slow places to grow your in. Probably not an ideal investment during retirement, unless you want to put your shares in a trust for future generations.

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However, there are other commodities that could be ideal for making some quick bucks, if you have the time to research. These commodities, such as coffee, beef, wheat, corn, etc. can all be extremely volatile whenever certain events take place. Say a hurricane destroys a good amount of the farms producing coffee in Guatemala. There’s a good chance coffee futures are going to plummet shortly after. That would be an ideal time to “short” coffee futures, or in other words, bet the market they are going to go down in price. Essentially, “short selling” is done by borrowing shares of something from a broker and selling them to the market at the current price. If it goes down in price, as you expect it will, you buy them all back at the lower price and return the shares to the broker. You keep the all the money you made from the sale, congrats!

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Another example could be an event happening that you anticipate having a positive impact on a certain commodity. Say a major domestic food corporation announced it’s going to go entirely vegan in a new chain of restaurants. You also hear it’s been a good year for most crops as there hasn’t been a drought all year. That might be a good sign that soybean production and sales are going to soar now that this company is most likely going to be making as much soy as possible for their new restaurants. That’s a good time to buy soybean futures in anticipation their prices are going to rise drastically soon.

 

Sometimes these major shifts in prices happen overnight or in a matter of days or weeks. Slightly different than what you might be used to waiting for gold and oil to rise, these other commodities can certainly be a good way to make money quick, given the right situation.