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Silver: The Versatile Asset for Building a Strong Portfolio

6 min

Silver might not be as valuable as gold, but it can be one of the best investments you can include in your investment portfolio.

If you live in Canada or anywhere in the world, silver is one of the investments that must be in your investment portfolio.

Silver will never be able to compensate for the value of gold by weight, but it is used in many industrial applications that are prevalent in the electronics industry.

Adding silver to your investment will add to your commodity holdings and investment portfolio.

There are several ways to invest in silver, and we will provide you with ways to expand your investment portfolio.

Is Silver Worth Your Investment?

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Silver might be the best investment you can include in your investment portfolio depending on your financial needs and goals.

  • The performance of silver in the investment market can be compared with the blue-chip S&P 500 index.
  • Its performance has been parallel with this blue-chip S&P 500 index for five years.
  • The price movement of silver cannot be tracked according to the broader economy because the demand and supply of silver can flow and ebb in the market.

There are several situations why people prefer investing in silver, but one of the main reasons to invest is diversifying their investment portfolio.

  • People tend to buy silver because it’s an expensive metal and is valued just below gold.

The value of silver is coherent when dealing with the likes of electronics and due to its inherent scarcity.

  • Even when economic turmoil is prevalent such as an economic crisis or recession, silver can retain its value as opposed to volatile investments like stocks.

However, before investing in silver, you must understand that your investment should be according to your investment portfolio, investment needs, financial situation, and the state of the economy.

There are many ways to diversify your investment portfolio and invest in silver.

Here are some of the ways to do that:

1. Silver (Physical)

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The simplest form of adding silver to your investment portfolio is buying physical silver.

  • A bar of silver is known as bullion and is named just like a gold bar.
  • Complexities that you will face by buying silver other than physically like paperwork and other stuff, will be solved by buying physical silver.
  • You might want to plan to ship, store, and secure the physical silver that you are buying.

The most beneficial deal when buying silver is opting for bullion bars or government-minted coins.

  • Silver ornaments, housewares, and silver jewelry look beautiful and hold some value, but there are complexities when using them as an investment.

There is subjectivity related to silver items where the value of craftmanship is at stake.

  • The value of silver housewares and other ornaments can degrade as these items are a mixture of silver with some other materials to harden them for everyday use.

2. Stocks (Silver)

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If you want to invest in silver without buying it physically, consider buying silver stocks from various companies.

  • The companies you are investing in must have their market revolve around silver deeply to maximize your chances of gaining profit from these stocks.
  • If you are into buying stocks of silver from various companies, you must know that investing in a single company might be volatile because individual circumstances can affect a single company.

For example, if the price of silver goes up, and the company you have opted for has a labor strike or is closed for business, you might not benefit as you should.

The vice versa is also true.

3. Silver Funds

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A silver mutual fund is another option that an investor can venture to diversify his investment portfolio.

  • In some cases, you can use them as ETFs (exchange-traded funds) and store them in your brokerage account.
  • You can store some of these mutual funds in your IRA (individual retirement account) as well.

However, you must be aware that investing in silver funds has some fees associated with them.

  • Management Fee is an expense that the investor has to bear and the tax associated with them is more complicated than stocks.

4. Silver Futures

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An investment you can make for the future is using silver futures to your advantage.

  • A silver future is a type of future contract where you will receive physical silver at your requested date.
  • It does not necessarily mean that you have to buy the physical silver. You can forward this agreement to another buyer and gain profit from it.

However, you must know that this type of trading is complex, and you can lose more than you have invested.

Conclusion

Silver investment can help you diversify your portfolio and might help you gain profit. Here are several ways to invest in silver.

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