What You Should Know About Investing in Natural Resources There are a number of reasons why investing in natural resources is something you should consider. For instance, there has been a decrease in the world’s natural resources. As a result, prices of resources such as trees have been going up over the years. Investing in a natural resource such as a forest can be profitable for the savvy investor. There are different natural resources that you can invest in. Among the most common are gold, coal and lumber. You should find out the benefits and downsides of investing in different resources before committing to buying them. Why Invest in Natural Resources Below are a number of reasons why it makes sense to invest in natural resources:
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i) Increased spending by developing economies The last few years have seen an increase in the incomes of developing countries. This has led to an increase in demand for natural resources such as precious metals and building materials. Natural resources are also prone to supply shock, like is the case with any investment. However, in the long term, investors reap huge benefits since the prices of these resources usually rises.
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ii) More infrastructure demand Investing in natural resources is also made profitable due to an increase in infrastructure development around the world. In the developing economies, there is a huge demand for steel, lumber, gravel and other materials required for construction of roads and other public works. Urbanization and an increase in population are among the reasons leading to the infrastructure boom in most developing countries. Apart from this, the majority of infrastructure constructed will have to be updated regularly. Countries are likely to spend more on the natural resources need for construction of public works and infrastructure when they go for decades without upgrading them. iii) Purchase by countries Various countries usually purchase natural resources to ensure there is no shortage of raw materials for their industries. Sometimes, the buying can be done through political agreements or foreign acquisitions. The demand created by governments makes investing in specific natural resources quite profitable. iv) Store of value You can use various natural resources to store your wealth. This is because they are not subject to general market fluctuations in the economy. Among the natural resources you can use to store wealth are precious metals. While company stocks are erratic depending on market forces, the prices of precious metals remain fairly stable. If you would like to store your wealth, investing in precious metals will be better than investing in stocks. If you wish to invest in natural resources, it is important to educate yourself on the options available. You can also hire an investment manager to guide you in investing in the resources. An experienced investment manager will advise you on the right investment option to go for that will bring the returns you want.