Silver was once knows as “poor man’s gold.” That is not a fair name, though, because silver is a valuable precious metal all on its own, and for good reason. Silver has more industrial uses than gold. Jewelers and tableware makers use silver. You’ll find it in dental alloys, electrical contacts, and batteries. In other words, silver, and the best silver ETFs, can be a valuable addition to your portfolio.
You probably have silver in your home right now. Even if you don’t have silver rings, coins, necklaces, or watches, there’s also silver in LED lights and circuit boards. Here are some of the reasons to consider investing in silver.
Why investing in the best silver ETFs is a smart move
There are many ways to invest in silver. You can buy individual stock in a silver mining company, or invest in silver directly, as bullion, coins, or certificates representing an interest in silver bullion. Then there are silver ETFs.
The reason some investors choose the best silver ETFs over other types of silver investments is twofold. The best silver ETFs involve an array of holdings, which equates to a greater level of diversification. This diversification leads to lower risk levels, which is what investors in precious metals often want to see. The resource sector that these investments fall into is typically highly volatile, so investing in the best silver ETFs provides a hedge against that volatility.
This level of diversification also helps in making investment gains. If you buy stock in a single silver mining company, you have to choose wisely to profit. However, since the best silver ETFs have an array of holdings, there’s an opportunity to generate profits from all of the holdings. Lower risk and greater potential for gains are major reasons to choose the best silver ETFs.
Another reason to invest in top silver ETFs is the expenses associated with ETFs. Traditional ETFs are known to have lower management expense ratios (MERs) than other types of investments. The MER relates to the fund’s assets and how they are used in operating or administrative expenses. Due to passive management on many traditional ETFs, the MER is lower than with comparable investments like a mutual fund that’s actively managed. There are also fewer trades with traditional ETFs, adding to their lower expenses.
Finding the best silver ETF for some investors
The term “best” can be somewhat subjective. What someone considers their best investment may not be the same to another investor, especially when considering investing temperament and goals.
Some investors think of the Global X Silver Miners ETF (SIL) as one of the best silver ETFs available on the market. This ETF tracks the Solactive Global Silver Miners Index. This ETF has been around for over ten years, and it follows over two dozen international firms that operate in various locations throughout the world. The top assets are performing in Canada, Mexico, and the United States. The ETF also has exposure to South Korea and Peru, as well.
The best silver ETFs can be a smart move over other types of precious metals investing. Not only do you get lower management fees and greater diversification, but you can avoid the hassle of providing storage or insurance for physical silver. The diversification leads to lower risk and a greater chance of hitting it big with one of the mining companies.
How do you handle investing in precious metals? Is a silver ETF part of your portfolio?