A Millennial’s guide to investing in commodity derivatives market

The millennials in India are aspirational and want to fulfil their dreams such as travelling to exotic places, buying swanky cars and huge bungalows, studying abroad, etc. They also want to help their retired parents.

In this backdrop, a huge chunk of millennials look at investing their hard-earned money into tools that can guarantee safe and stable returns. While taking the decision, they go through various investment instruments such as equities, real estate, mutual funds, FDs, etc.

However, no asset class can guarantee returns, and investors need to have thorough knowledge of where they are investing and choose those tools that they can understand easily.

Among many others, one of the asset classes that is easy to comprehend is commodities.

The commodity derivatives market consists of various commodities such as gold, silver, cotton, crude oil, agri-based products etc. Investing in these products is easy, all you have to have to do is read and gain knowledge.

Commodities are traded on the bourses and are not dependent on the performance of a company, individual or financial regulatory bodies or financial status of a company.

The prices depend on inflation, monsoon, seasons, global prices trend, and more. They are immune to any political change or global crisis. Also, there is price transparency as commodities work on global price trends.

Moreover, you don’t have to put in huge amounts of money. You can invest in smaller lot sizes as well.

Now, SEBI has given a nod to NSE to launch commodity derivatives segment. For now, NSE has launched investing non-agriculture commodities, followed by agri commodities, subject to SEBI approval.

Before investing in the commodity derivatives market, you must study the data base of the particular commodity, gather full information about the products, etc.