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These days, if you are planning to invest somewhere, then Silver ETF can prove to be the right option for it. Commodity expert Ajay Kedia estimates that silver may once again go up to Rs 3 lakh per kg by the end of this year. Currently its price is at Rs 2.29 lakh per kg.
Through Silver ETF, you can invest in silver like shares. In this you can start with very little i.e. Rs 250. It has given returns of more than 65% in the last one year.
What is a silver ETF?
Silver ETF i.e. Silver Exchange Traded Fund. To understand this, just know that this is a fund which is based on silver prices. You invest money in it, and this money increases and decreases according to the price of silver.
But in this you do not need to buy real silver. Neither safe nor locker is required. All this is done by the fund house, and you can simply buy and sell it through a demat account on NSE or BSE, like any share.
How does this work?
The fund house of a silver ETF buys real silver, which is 99.9% pure. Now the price of the ETF you buy depends on the market price of silver. If the price of silver increases, the value of your ETF also increases. It is also easy to sell, you can sell it anytime in the stock market during trading time.
There are many benefits of investing in silver ETF
- You can buy silver even in small quantities: Buy silver units through ETF. This makes it easier to buy silver in small quantities. The price of 1 unit of Silver ETF is currently around Rs 150. That means you can start investing in it with Rs 150.
- Silver remains safe: Electronic silver is held in a demat account in which only annual demat charges have to be paid. Also there is no fear of theft. Apart from the risk of theft of physical silver, there is also expenditure on its security.
- Ease of Doing Business: Silver ETFs can be bought and sold instantly without any hassle. That means you can sell it whenever you need money.
There are some risks too
- Price Movement: Silver prices sometimes change rapidly. If the market falls, the value of the ETF will also fall.
- Dependent on industrial demand: Apart from jewellery, silver is used in solar panels, electronics, and medical equipment. If demand in these industries decreases, the price of silver may also be affected.
Things to keep in mind while choosing a silver ETF
- Fund House: Always choose ETFs from a fund house which has a good track record and low management fees.
- Tracking Error: Some ETFs do not track the price of silver perfectly. In such a situation, give preference to ETFs with less tracking error.
- Long Investment: Silver prices fluctuate in the short term, so take a 3-5 year perspective.
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