Forex and commodities as alternative investments
A trend I often see today is the increased interest of Filipinos in investing and personal finance. Whether it’s because of an increase in affluence, the easy availability of information or simply a conscious effort to get money moving, the number of investors have been rising the past few years. A typical Filipino investor will often have funds put away in insurance, real estate or stocks, with these three being the most popular investment types available.
However, as an investor, you’re not limited to these three types of investments. There are actually plenty of alternative investments available for investors of different risk appetites. Since I work in the forex industry, I’ll list the ones I’m most familiar with, to give readers an introduction to these investment types.
When someone mentions foreign exchange, what’s the first to come to your mind? By its definition, forex trading is simply the buying and selling of the different currencies of the world. For many of us, foreign exchange, or forex, is usually only done when we go out of the country or when we purchase goods or services from abroad.
What many people don’t know however is that the forex market which deals with currencies is also the largest market in the world with over 5 trillion in daily trading volume. To give you an idea of how large it is, consider that the largest stock exchanges in the world trade only in the billions. Another unique feature of the forex market is its open 24 hours a day, 5 days a week, which makes it a good choice of investment for those with busy schedules.
Forex trading is known as a high risk-high reward market, so it’s definitely not for everybody, but for more adventurous investors, forex trading may be worth looking at.
Commodities are the raw goods and products that we use in our everyday lives. Oil, sugar and wheat are examples of commonly traded commodities that we also encounter daily. It might sound strange to a new investor that wheat is considered a financial instrument investment, but the commodities market is actually a major worldwide market.
The prices of commodities rely on supply and demand. Oil recently saw its demand fall drastically, resulting in the low prices you see in gasoline stations around the world. Weather and demographical changes can also affect commodity prices: an extended drought in a major wheat producing area can result in higher prices for wheat commodities. One of the most widely traded commodities in the world is gold, which is often used as a safe haven during crisis, such as the 2008 financial crisis.
Like forex trading, commodities are also a high risk, high reward investment, and should be treated as such by interested investors.
Investing in alternative markets
The common theme for both of these investments is their risky, yet lucrative nature. This makes them ideal for investors with an appetite for risk, much less so for those who are looking for a relatively safe investment.
If you’re interested in alternative investments, my best advice would be to do your research. There is plenty of material available online which can give you a better picture of how these investments work, and it’s definitely worth the time and effort to give them a look.
About the Author:
Bwayan Jordison, is a contributor and Forex Trader at Metisetrade Inc., he writes articles to help and educate everyone about the benefits of investing to Foreign Exchange in the Philippines.
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