How to Buy Commodities Stock

Investing in commodities stocks can provide security and balance to an investment portfolio.

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Commodities stocks are like regular stocks in that you can buy and sell them on the market. However, while stocks represent shares in specific companies, commodities stocks are shares in physical items, such as gold or corn. Commodities stocks do not generally follow the market the way traditional stocks do, which provides some balance and stability to an investment profile.

Step 1

Open a brokerage account if you do not already have one. These accounts can be opened online. There are many online brokers that are reputable and will give you the ability to control your own investments. Look for one that charges minimal fees for the service.

Step 2

Research the kind of commodities stocks you are interested in buying. There are many different kinds of commodities. Many people invest in gold and other precious metals. Others prefer to invest in energy sources, such as oil and coal. You can also invest in agricultural products. Research the annual returns on the commodities you are interested in buying and consider buying stocks in the companies that work with those commodities as well.

Step 3

Consider investing in exchange-traded funds. These are portfolios of commodities that are selected by experts. ETFs are spread across multiple types of commodities, lessening the risk if a specific commodity fails. Additionally, because they are balanced groups of commodities, there is less research required on your part. You don't have to find the specific companies that are affiliated with the commodity you want to purchase and you have more flexibility in your investment.

Step 4

Use your online brokerage account and purchase shares in the commodity stock or ETF that you want to buy. Determine how much you are interested in spending, how much of your portfolio you want to be in commodity stocks and purchase enough to reach that goal, trying to keep as diverse a commodity profile as possible.

Tip

  • Commodities in developing markets can appreciate significantly as the market grows. However, with all stocks there are risks associated with volatility.

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