How to Invest in Commodity Mutual Funds

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Hello my name is Roger Grow from Grow Investments, thank you for spending a few moments with me this morning. Today we are here to talk about commodity mutual funds, how you can invest in them and really how you can benefit from having them in your portfolio. Historically, commodities have gone up in price as inflation has gone up in price, so you have to time it's a little bit. If you think that inflation is going to picking up in the year 2010 or 2011 will maybe commodities begin to make sense at some point prior to that. On the other hand if the economic data still provides evidence that there is deflationary pressure going on, like there is today, with commodity prices falling maybe it is a good time to avoid them.

Okay, at some point commodities will come into play again - so what is a commodity? It could be something as simple as oil, which we all know long-term is going to see an increase in demand, and probably see an increase in price. In the case of metals, they tend to do well when the building business is expanding. The reason is, as an example, is copper - most wires have copper in them in order for electricity to flow through them. So as long as you're building buildings and putting in wire copper does pretty well. On the other hand if there is no growth in the building business and there is no growth in the home renters business it’s tough. So you have to time to commodity business a little bit.

Now where can you buy commodity fund? You have to be very careful and discuss this at length with your trusted broker. Perhaps you could call Merill Lynch or Goldman Sachs or White Pacific Securities or Charles Schwab or any of the other discount brokers. If you do call a discounter be sure that ahead of time you have spoken with somebody else who is very knowledgeable about commodities and be sure that you know what you are buying. Some commodity funds employ leverage which means your prices can go higher faster, on the other hand they can go down quicker. Also some commodity funds short prices, which is fine if the prices are falling, but it really hurts you if they begin to go up, so make sure you know what you're buying if they are not your normal mutual fund. I'm Roger Grow and thank you very much for spending a few moments with me about commodity mutual funds.