Financial Planning

Exploding populations throughout the world have placed additional pressure on natural resources. This is perhaps nowhere more the case than on the continent of Asia. More than 3.5 people live in Asia, making the continent home to one-third of the planet’s population. The percentage of elderly and children is declining but the population of individuals age 30 to 60 is expected to experience enormous growth during the next decade. Investors are beginning to sink their money into commodities in emerging countries because these supply Asia with much of its needs.

Commodities investors focus on investing in anything that is based on hard assets. The increased presence of ETFs has allowed commodities to further permeate an investment portfolio. If an investor is not careful, the portfolio will suffer from lack of diversification. A portfolio with this characteristic should be overhauled to include investments in other sectors.

However, those who have yet to make investments in commodities should consider doing so. The demand for these hard assets increases as the population grows. Construction of infrastructures requires the use of metals and various other materials. Electricity and transportation need large amounts of energy resources. Population growth means the demand for food products increases, including corn, wheat, and other soft commodities.

Commodities account for over 14 percent of global economic output and are the basis for goods and services. Investment in a commodity should be approached with the perspective of long-term demand. Commodity prices can experience short-term moves due to things such as environmental conditions or amount of reserves. Those who invest in these items need to look at the potential long-term need for these hard assets.

The population reallocation and explosion in Asia will equate to the country having more residents and a greater proportion of those will be wage earners. Investors should begin diversifying their portfolios with commodities holdings to take advantage of these trends. Forecasters believe that investing in commodities that are exported to Asia (like gold) is a very wise decision.

The best commodities stocks to consider investing in would be Asian gold stocks, agriculture stocks, mining stocks, dividend stocks.