So far you have learned about stocks, bonds, mutual funds, and real estate; yet there are a few more investment options to consider. In this lesson, you will learn about commodities and retirement funds.
When you get up in the morning, do you have a cup of coffee or hot chocolate? Maybe you pour a bowl of cereal and put some sugar on it. When you do that, you are affecting the commodities market. What is a commodity? Commodities are raw materials or agricultural products used to create products you buy.
Some examples of commodities are:
- wheat, corn, soybeans
- sugar, coffee, and other food stuff
- oil, gold, natural gas
Commodities are sold in bulk by the companies that produce them and bought by companies that use them. They are traded just like stocks but on a futures market. The futures market is where suppliers and purchasers of commodities negotiate for payment of goods to be delivered on a future date.
Some examples of people who trade in commodities are:
- farmers who produce commodities
- businesses that use commodities to operate
- investors with an understanding of commodities
Level Up!
Now that you know what commodities are, apply your knowledge to the activity below. Read the action described and decide if it refers to investing in a commodity or not. Keep trying until you have all the answers correct.
