We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Financial Future?

Malcolm Tatum
By
Updated Feb 07, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Financial futures are any type of futures contracts that are structured with the purchase or sale of a specific type of financial instrument. Typically, the configuration of a financial future calls for the application of a short-term interest rate,a or STR. While this is not always the case, the market value of a financial future will generally move in a direction that is in opposition to the current movement of the prevailing interest rates.

There are several different types of financial instruments that may be utilized in a financial future investment strategy. Certificates of deposit are often the focus of futures investing, as are Treasury bonds. Foreign currencies are also a popular option for this strategy. In all incarnations, the instruments used as the basis for the futures contract will include a specific future date and a specific price that will govern the purchase or the sale. Typically, the date will be for some time within the next twelve months, more often between three and six months.

With proper planning and projection, investors can earn a decent return by utilizing a financial future approach. For example, if some type of foreign currency is the financial instrument of choice, the investor will want to project future movement of that currency over a specified period of time, and identify a future date that is ideal for completing the purchase or sale. Determining the price that is likely to benefit the investor depends greatly on how the currency is expected to perform in the period between the current date and the future date. Assuming that the investor evaluates market conditions correctly, and the currency performs as projected, the investor exercises the option to buy or sell on the future date, using the specified price, and is positioned to benefit from that transaction.

As with any type of investment approach, going with a financial future scheme is not without some degree of risk. While the use of instruments that have a relatively low volatility rate, such as certificates of deposit, help to minimize that risk to some degree, there is always the possibility of unanticipated events in the general economy or the market place that have an adverse effect on the outcome of the futures contract. Acts of nature, as well as unanticipated political shifts, are two examples of factors that may suddenly appear and alter the course of the investment. For this reason, the smart investor balances his or her involvement with futures contracts with other investment opportunities that can help offset any losses sustained due to these unforeseen circumstances, and protect the integrity of the investment portfolio.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.