Almost everyone who is financially literate to an extent knows the value of investments such as stocks and bonds. Those who are employed by government and responsible private companies also know about retirement investment plans. However, not as many people know how much they can gain from investing in precious metals such as silver.
Silveris a greyish white metal that occurs naturally and is one of the precious metals that can be used for investment. Like its other counterparts such as gold, it has both intrinsic and industrial value and is a rare commodity. Its rarity makes it even more highly sought after and valuable. You can check out this site for more fun facts about this precious metal: https://www.thoughtco.com/
In this article, we will discuss the benefits of investing in silver and how to invest in it.
Benefits of Investing In Silver
There are many benefits to investing in this shiny grey metal and we will discuss them briefly as follows:-
- Great Return on Investment – It has consistently performed better than other forms of investments like stocks and bonds.
- High Liquidity- This precious metal is highly liquid which means that you can easily sell it without reduction in the market price.
- Useful as a Store of Value – it is a commodity that maintains its value over time and is an investment asset that generates profit in the long run.
- Hedge Against Inflation – its value is not tied to other assets or the economy which is why it is a good hedge against inflation.
- Useful For Diversification of Investment Portfolio – Following from the above point, this asset is recommended for investors to diversify their portfolio. It serves as insurance for other assets in a portfolio.
Different Ways of Investing In Silver
There are different ways in which one can invest in silver and they include buying the physical commodity, buying silver ETFs, Futures and shares or other assets that are backed by the precious metal. A clear understanding of these different means will help you to know which of these means of investment will work best for you.
Owning Physical Silver
You can own this metal physically in the form of bullion or coins. Most people say that they find it satisfying emotionally and psychologically to invest in this metal by owning the physical stuff. It is actually one of the easiest assets to access and you can have it in your safe or even use it in jewelry form.
However, you can only make money from this type of investment only if/when the price rises. It doesn’t provide cash flow like a business venture would/may. This is why it is a great long term investment asset.
You can buy this commodity from online dealers, pawn shops or even local dealers. Just ensure that you do your due diligence for tips on how to identify genuine precious metal so that you will not be scammed. You can learn more about this here.
This means of investing in this precious metal enables you to enjoy the benefits of trading in silver without owning the physical commodity. When you invest in futures, you wager on the spot price of this commodity for a particular time in the future. This means that you can fix an amount to buy or sell in the future. So you make profit based on whether the price increase or whether it fell.
This is actually an attractive means of being part of the market for this precious metal because of the kind of leverage one has with this type of investment. You can put down capital that is relatively smaller than the position you hold in the commodity. There is the possibility of making great profit just as much as there is possibility of great loss. This is why newbies to investment are advised not dabble into futures.
Silver Backed ETFs
This is deemed as one of the cheapest and easiest means of investing in silver. All you need to do is pool money with other individuals through an investment company. This company will buy assets that are backed by this precious metal and your return on investment will rest on the increase in price of the physical commodity.
This grants you access to the rewards of owning physical silver without the risk of holding the physical commodity. With this method, you can sell your asset at market price and it is quite liquid. You can also mitigate the risks of illiquidity, theft and inability to get top price if/when you want to sell.
This works just like the traditional Individual Retirement Account (IRA). However, the distinguishing factor is the asset that’s deposited in the account and in this case, what you deposit is physical silver. People are advised to spend between 5 and 20 % of their retirement funds on precious metals IRA. This is because unlike cash, these metals do not depreciate so they act as a hedge against inflation.
When you deposit silver into your IRA account, what you have will always be valued by the spot price of the commodity. This means that the value of your investment will keep rising as the commodity price rises.
One major advantage of this investment method is that it is also highly liquid. This means that when you are ready to cash out your ‘savings’ the silver can be converted to raw cash and paid out to you. This will surely come in handy for your retirement or you can plough it back into some other investments. You can read this BMOGAM Viewpoints article for more information on this.
Silver is one of the precious metals that not only have great intrinsic value but can also be used to store wealth. Additionally, it is a great asset for investment. We have shared some of the ways that one can invest in it. We have also shared some benefits of investing in it.
Do not forget that if you do not know much about investing in a particular market, the best thing to do is consult a professional. Look out for a good and reputable investment company and commit your funds to them. Then you can rest easy that your funds will not be misused and you will get a good return on your investment.