Stocks make sense to most people. You give a company some money, buy in as a partial owner, and in return if the company does well you get a cut of the profits. But what of Futures? They’re a little different, let me show you how:

Futures are about contracts and these contracts have a quantity, price and a expiration/delivery date. If you were going to buy a futures contract in, say, cattle you would buy a contract that would guarantee a delivery of 50 head of cattle at $20 a head that would be delivered on July 10th. Now you’ve got a contract worth $1000.

But how do you make money on it? It’s simple speculation. Will the market price be greater or less than the value of the contract when the contract comes due? If the value will be greater resell the contract at a higher price, if you think the value will be lower sell the contract now and get what you can for it.

If you do any investing you know that bonds are a safe place to put your money for a long term investment. Put a chunk of change in a 10 year Treasury bond with fixed 5.5% return and at the end of the ten years you’ve got a fair return on your investment. But if you’ve looked at the bond market recently (a growing economy, but then there’s the whole sub-prime mess) you’d be lucky to find something with a return greater than 5%. With uncertainty about the state of the economy bonds have fallen to a near record low. So what do you do? Look for funds with short-term maturity dates. Invest for 2 or 3 years and when rates turn around you can put your money back into a bond with a higher interest rate. Consider also municipal bonds which don’t always offer the highest return but are federally tax exempt. Remember that the point of investing in bonds is put your money somewhere safe - low risk with moderate return.