Investment in Commodity Exchnage

POSTED BY Nilesh K ON May 2, 2011 3:41 pm COMMENTS (6)

Hi,

I had been to a seminar on financial planning by a local wealth management company a couple of weeks ago. Compnay manages private wealth and has delivered 24% returns over the years by investing people\’s money in various products according to their need.

In the seminar, apart from all the financial products (PPF, MF, MIPs etc) he suggested rather insisted on putting some money in commodity exchange e.g in gold silver, copper etc.  How easy it is for retail investor to judge fluctuations in commodities? All articles, tv shows suggest only PPF, MF, MIP, FD etc thus I\’ve never heard anybody mentioning about investment in commodities for financial/retirement planning. Any thoughts?

Regards

Nilesh Kelapure, Pune

6 replies on this article “Investment in Commodity Exchnage”

  1. kamal1256 says:

    Investment is always secure, but the companies that have no website, no portal, its very difficult to believe on such companies. So its better to choose the best in the industry and they always get the best suggestion before investment so that you can earn maximum.

  2. Manish Jain says:

    Nilesh,

    Please stay away from people that can guarantee a return unless it’s a fixed deposit. Ramesh summed it up best with his answer.

    People invest for two reasons fear and greed. Fear of being left behind and greed to make more. You personally have to balance the two.

  3. Ramesh says:

    According to Benjamin Graham, an investment operation is one in which after “thorough analysis” provides safety of principal and an adequate return. All other operations are speculative. This is a quite reasonable definition of Investment.

    The commodity markets are highly speculative (not investing) in nature (Including gold and silver) because the underlying analysis of these things is based upon the fear of all currencies (particularly dollar) losing its value, and there is neither safety of principal nor a provision of an adequate return.

    If you want to speculate in those areas, you are free to do so, but do not ever think it is a proper “investment”.

    Any company can show you that they have given so-and-so returns for this client and that client, but you should be wary to see how is that possible? Against what standard / index? If a proper index has given similar returns, then what is the possible use of that company? It is very easy to just drop the non-performing stocks / clients from the database and you will be able to show a very good return.

    Any person / company / website which advertises (advertising requires money) that they have given stellar performances by using commodity / stock trading / tips etc would never get my vote of confidence. Because that is NOT possible in a “less than zero” sum game!

    If i knew of such techniques, i would not share with everybody and dilute it. why would this company be doing that? Point to ponder, isnt it. Why are they advertising and giving a seminar on it to general public (why not to just a few high-net-worth clients, if at all) ? Are they guaranteeing the returns in future?

    In the end, be wary of “fear” and “greed”!

    1. Nilesh K says:

      Thanks Ramesh for the great answer. Now I got it, it’s purely speculation and hence we don’t see much of these as part of your financial/retirement planning.

      The company I was talking about operates according to the need of investor. e.g if a person comes with 1lac and need 1.50L in the future, the company gives him a date at which he can take his principal and returns. Quite impressive han! Not sure if other wealth management companies operate on the similar lines.
      However I kept myself away and just for the sake of curiosity attended its seminar.

  4. Manish Jain says:

    Investing in gold and silver is quite common. As far as copper and other metals not so common.

    For gold there are several options: 1. gold jewelry 2. gold biscuits 3. gold ETFs

    More importantly who is this advisor who is delivering 24% returns. Any name, website or email?

    1. Nilesh K says:

      For Manish, company is from nagpur and name is lakshmi financials. No website and i don’t have any contact numbers as well. 🙂 I didn’t bring the brouchers back home.

      Let me know if you still need it, I’ll try yo get it. 🙂

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