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<br>One can invest into companies which deal with commodities such as coal commodity. <br>
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Commodity, in simple terms, points to those raw materials which are used to make other different products. • They actually can range from agricultural such as wheat to metals (e.g. gold) to even energy (natural gas). • Hence the price movement makes them an attractive option for investments, be it high risk high gain or low risk, balanced profit depending upon how the investments are made.
Futures market this is a high risk high gain way of investment in commodities done through future contracts and hence not advisable to inexperienced investors as they can lose big amount of money.
Futures contract is a legal agreement that is to buy and sell a specific commodity at a pre determined price at a specific time in future. • Though risky, it has some specific advantages such as, with just minimum deposit, a full contract can be brought upon which would have been hard to afford in other circumstances. • Similarly one can borrow capital and can make significant profit if he/she knows the direction of market.
Stocks: Stocks are relatively less risky than futures market where you also have "stock options". It is less prone to price swings than futures with added advantage of it, being "liquid". Since public information on the financial institution/company is readily available, hence one can make better judgments through research and experience; though the profit can be impacted by not only the swing in the market but also due to policies or the conditions inside the company.
Mutual fund:mutual fund is an indirect way of investing in commodity market. Since it cannot directly get involved in the market, yet, through mutual fund, one can invest into companies which deal with commodities such as coal commodity. Since mutual funds are professionally managed, an inexperienced investor may invest at lower risk than the above mentioned ones (though it still is subjected to market risk). The added liquidity factor makes it more lucrative option for investment.
Managed futures:It is somewhat works in the same way as mutual fund where a commodity pool operator (CPO) will pool the money and will invest in futures contract which is professionally managed and takes a lot of burden away from the investors putting the more on the CPO. Hence CPOs does need to disclose the risk factor along with periodic account statement, financial annual report. Since money is pooled, it gives more capital to invest along with diversifying the amount. Also important to mention, a professionally managed pool brings the risk factor lower than what could have been had, the investor was investing by himself though with little knowledge about the market.
