Cotton makes up around half of the fibre used in the production of our clothes and other fabrics. 20 million tonnes is harvested and traded each year; for comparison, that is around 20 t-shirts for each human being annually.
Due to its demand cotton has a large and fairly stable presence on the stock market making it a favourite for investors. Find out the different investment methods to invest in cotton and the risks involved.
Instead of investing in the stock of one or two companies, ETFs give you the option of placing your money with a bundle of assets. You can learn more about ETFs here.
ETFs are a simpler way of entering the market. While they work much like regular stocks ETFs are protected somewhat from market movements because they don’t rely on the performance of one company.
If you are still learning the basics of investing then ETFs are a great introduction. Cotton is a massive industry with a number of companies offering ETFs, so it may be a good place to start.
Futures are one of the riskier methods of investing, and while they can be very profitable they can just as easily lose you a lot of money.
By investing in futures you are agreeing to buy a commodity at an agreed price to receive at a later date. If the price you agree to buy at ends up being lower than the price of the commodity when you receive it you will have made a solid return, however the market may be against you and you could end up paying more than necessary.
Futures operate on both buyer knowledge and luck. If you are new to investing it is recommended you learn the ropes before considering futures as an option.
Stocks are a common option for investors, taking back the control you lose when investing in ETFs while also remaining less risky than futures. While stocks run a comfortable middle ground between the other options, they are still vulnerable to market movements and should be approached with a bit of market knowledge.
Cotton is a massive industry and will continue to be as long as we choose to wear clothes. There are plenty of brokers offering a selection of company stocks for you to choose from, and with its prevalence cotton may be a good place to start.
To make comparing even easier we came up with the Finder Score. Costs, features, ease and range of investments across 30+ platforms are all weighted and scaled to produce a score out of 10. The higher the score the better the platform – simple.
Read the full methodologyAll investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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