What is the difference between a mutual fund and a commodity? Would these investments be suitable for the same investor?
What will be an ideal response?
A mutual fund is a pool of capital invested by many parties. The fund is then invested into different securities as deemed appropriate by its professional fund manager. Commodities include wheat, corn, and cattle—all of which are traded by volume. While commodity trading can be separated into spot trading and futures trading, many investors engage in futures market trading, which is highly speculative. There are a wide variety of mutual funds, and many with different goals. If your objective is growth and you are willing to speculate, then futures commodity trading might be for you. If you want a more managed risk, then the mutual fund route might be more appropriate. Once again, the first step here is identifying your financial investment objectives, and then choosing the investment that best matches your objectives.
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