The ultimate guide to investing in Silver ETFs

by Kanika Shelatkar Insurance Consultant

Silver Exchange-Traded Funds allow you to invest in the white metal without dealing with the physical hassle of buying and storing it. With low expense ratios and high liquidity, they are becoming an increasingly well-known investment option for novice and seasoned investors. You can quickly diversify your portfolio and hedge against inflation with these funds. Silver ETF invests primarily in physical silver, futures contracts, or mining stocks.

It allows you to gain exposure to the silver market without physically owning or storing silver. Like shares, you trade them on stock exchanges, and the prices fluctuate throughout the day. They offer low-cost ways of investing in silver as they have lower expenses than Active Funds.

Types

There are two types of silver ETFs: physically backed and Futures-based. Physical silver bullion backs the former and aims to track the metal’s spot price. The ETF buys and stores the physical silver and issues shares backed by the silver holdings. Futures-based ETFs invest in silver Futures Contracts instead of physical silver. They have an expiration date and roll the contracts over as they expire to maintain risk exposure.

How to invest?

Investing in Silver ETF requires knowing your financial goals, risk appetite, and fund availability. If you are keen to do so, ensure you open a Trading Account with a recognised broker registered with the SEBI. Follow these steps:

Choose a broker

To invest in Silver ETF, choose a good broker. Ensure that the broker you select allows online trading in ETFs and has a good reputation. You can get guidance from investors, investment experts, and even online fund houses. Read the reviews, and check the AMC value, the fund manager’s credentials, and the company’s reputation before investing.

Select the appropriate ETF

There are several silver ETFs available in the market. You must choose the best option for your investment goals and portfolio. Before deciding, look for factors such as expense ratio, assets under management, liquidity, etc. Using the lumpsum or SIP method, you can invest in the best silver ETF and receive decent potential returns over time.

Place the order

Once you have chosen the ETF you want to invest in, place an order through your broker. The process of doing so varies slightly depending on the broker. Usually, it is simple, quick, and straightforward if you have a stable data connection on your device. You can also check the Silver ETF price online before placing the order.

Final words

Silver ETFs offer investors an easy and cost-effective way to invest in silver. They provide exposure to the price movements of silver without requiring investors to take physical possession of the metal. Additionally, they offer benefits such as diversification, liquidity, and low expense ratios. Carefully consider your investment goals and risk tolerance before investing.