Last year, students from Amity International School in Noida won 2nd prize in the prestigious Knowledge @ Wharton High School Investment Competition. It was Amity’s fourth straight win in the competition, which tasked high school students to come up with investment strategies based on global asset management. If anything, Amity’s successful four-year run in the competition is proof of the immense potential of India’s young minds in the world of investing.
Never too young to invest
Delhi-based Jatin Kheman is one of those young minds. In 2010 he started investing in stocks at the age of 21. Still relatively young at 30, the Delhi University alum is now one of India’s most successful traders. Former engineer Pratik Patel is another young mind, giving up his profession at the age of 26 in favour of trading. Kolkata’s Soumya Malani is another under-30 trader who has found considerable success as an investor. Kheman, Patel, and Malani are proof that even young investors can be successful. They are also an inspiration for India’s young entrepreneurs, whose success might ultimately hinge on exploring commodities trading.
Offers a wealth of opportunities
Most traders and investors in India focus on the stock market. But it should be noted that commodity trading, generally neglected in India, is actually a lucrative investment strategy, too. The increasingly popular Indian commodity derivatives exchanges, in particular, are helping modernize and improve the efficiency of India’s commodity sector, primarily by establishing a futures online market to improve transparency. This means that there is more than one way to succeed in trading, and investing in commodities is one of them.
Successful investors diversify their portfolios. FYERS CEO Tejas Khoday touts diversification as one of the benefits of investing in commodities, noting how commodity returns “usually have negative correlations with the returns of other asset classes.” Dips in bonds and stocks generally mean a rise in commodities. In other words, investing in commodities is less volatile and helps ensure better returns. This is especially critical now given the increasing volatility of the BSE Sensex and the NSE Nifty. Both have tanked lately, and it is a trend that is likely to continue in light of uncertainties caused by the Lok Sabha election results and the US-China trade war, as well as the looming crisis involving India’s nonbanking financial companies possibly defaulting on their payments.
Allows for precious metals trading
Precious and industrial metals are traded on the Indian commodity exchange, with India Info Online explaining how levels of industrial production influence base metal prices. China accounts for more than 50% of the global consumption of these metals, especially in their rapidly expanding technology sector. In this regard, investing in metals used in this sector like copper, magnesium, aluminium, nickel and gold are advisable for the short, medium and long term, as they can all yield productive returns. However, unlike other metals gold remains the standard in commodities trading. FXCM explains how gold is seen as a safe haven investment and while stocks may plummet during a crisis, gold prices generally rise. This is currently happening in India. The Economic Times reports that gold prices have climbed, in part due to the increase in demand and also due to global fears caused by the US-China trade wars.
Your 20s are a decade in your life where you have the time to explore your options before taking on the traditional responsibilities of older adults and offers you the chance to set yourself up for life. This means these early years are a great time to start investing, particularly in commodities. While Kheman-like success isn’t a guarantee, if you start early, investing can yield great financial benefits.
Dips in bonds and stocks generally
mean a rise in commodities