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Cocoa is a luxury commodity and a crucial ingredient in many of life’s finer things: from sweets to pharmaceuticals, to various cultural dishes. Its popularity makes it a prominent asset on the stock market, but supply problems, environmental and political issues can sometimes make it an unstable investment.
Here we discuss how you can invest in cocoa and the risks that come with it.
ETFs allow you to invest your money in a range of assets rather than focussing your investments on one or two firms. To find out more about ETFs have a look at our comprehensive guide.
ETFs are a fairly accessible way of entering the market and function in a similar way to normal stocks. They are often seen as a more straightforward, and less risky, way of investing your money. Trusting your money to a collection of assets makes your investment more resilient to the fluctuations of the market.
If you are a newcomer to the investment world ETFs may be something to consider, and due to cocoa’s popularity, there is no shortage of ETFs to choose from.
Buying futures allows you to invest in cocoa stocks at an agreed price to receive at a later point in the future. Whether you make great returns on your investment or lose money depends heavily on the movements of the market.
Futures are direct but risky, vulnerable to market fluctuations they rely heavily on the buyer’s knowledge and a small shot of luck. A system that can punish the buyer just as easily as rewarding them, market newcomers may want to gain some experience first.
One rather common way of investing in a commodity is through stocks. Due to cocoas market popularity, there are a variety of companies for you to choose from, and if you are interested in investing in cocoa there are a number of advisors and brokers to guide you through the process.
While they aren’t as risky as futures, investing in stocks still requires some market knowledge, but by buying stocks at their current price you are less vulnerable to market fluctuations. However, if you are looking for a safer investment ETFs may be a better choice.
Cocoa’s global popularity makes it a massive commodity and a popular investment on the market. Even so, there are risks involved in any investment, cocoa included:
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