Why You Should Add Futures to Your Investment Portfolio

Why You Should Add Futures to Your Investment Portfolio

A diverse investment portfolio is a healthy investment portfolio, but it can be easy to get lost in all the different types of investments accessible. Since they involve speculating the value of goods down the road, the concept of futures can be intimidating to new investors — but they’re simpler than they seem and can actually add significant value to your investment portfolio. Below are a few reasons why you should invest. 

High Liquidity 

Futures are a huge market, and that means that there are always buyers or sellers available. Unloading futures or quickly buying up more is easy thanks to the health and scale of the market, an advantage furthered by the fact that futures exchanges can happen outside of ordinary market trading hours. The number of people invested also ensures some level of stability, particularly as contracts near maturity. 

Resistance to Insider Trading 

Since stocks are predicated on decisions being made inside of corporate offices and shareholder boardrooms and tend to operate based on real-time attitudes and metrics, insider information can seriously compromise the integrity of stock. But since futures require being able to predict what’s going to happen, they’re largely immune from insider trading. You shouldn’t have to concern yourself with what privileged information you don’t know — or who you don’t know — with futures. 

Electronic Platforms 

There’s a cold war among app developers to create the most accessible stock trading platform, but the fact that futures have their own effective platform for trading sometimes gets overlooked. Companies such as E-futures offer impressively robust futures trading software that’s also free to use. They are a full cloud-based toolkit for evaluating the market, making exchanges, and monitoring the health of your investments. 

Straightforward Pricing 

A futures exchange is a direct and straightforward contract with a specific party, and it comes with a clear expiration date. Companies will often hedge or bolster their assets by investing in futures related to the commodities they primarily trade-in. They’re especially effective as a method for offsetting fluctuating interest rates or the risk of changing foreign exchange rates. The ability to diversify your portfolio with little risk along with the ability to quickly liquidate makes them a highly adaptable hedge investment. 

Low Overhead and Costs 

Easy liquidation is good in its own right, but it’s especially valuable when you consider how little it costs to trade in futures. Commissions can be found for as low as half a percentage point on the contract, and many online services will offer flat rates as low as $5. That makes futures an ideal entry point for new investors as well as experienced investors looking for diversity.

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