Do you know what ETF stands for in the first place? The term “ETF” simply means “Exchange Traded Fund” – which is a kind of investment that is traded on the stock exchange- just in the same manner any stock would be bought and sold. However an ETF is a fund that holds assets such as commodities, stocks, or bonds (any asset class, really) and trades at the same value as the net value of its underlying assets during a trading day. Having an Exchange Traded Fund can be good investment because of their lower operating costs, stock-like features and tax efficiency.
Exchange Traded Funds can sometimes represent a group of investments like mutual funds; the only difference is that they tend to have lower costs than most mutual funds do, especially actively managed mutual funds. In special cases like the silver ETF, this type of fund will track silver related companies or indexes. What does “track” mean? Simply put, if you are interested in precious metals investment and you have a particular interest in silver, you would want to track the value that investment over time in relation to the price of silver.
Assuming that you have read about silver, are well informed about its value, and think that the metal will increase in price, then clearly you are at a decision point of investing in silver. Of course your main option will be to buy now while it is still cheap and then sell it when the value increases, obviously. So how do you do that? This might involve buying the metal yourself and keeping it in a safe deposit at your bank and bringing it out when it is time to sell.
But an even easier solution for investing in silver is if you buy shares in a silver ETF. As far as precious metal ETFs you are not limited only to silver – others are available as well like gold, iron, copper, etc. With silver ETFs, you will not have an actual possession of the silver itself, but you will be investing in companies that hold silver investments. The silver Exchange Traded Fund that you purchased represents a set amount of silver, as if you had silver in hand. As a result, if the price of silver increases in the market, your ETF increases as well and decrease if silver goes down.
There are a lot of classifications of silver that can be bought and your ETF doesn’t have to represent raw silver or coins it can also represent silver derivatives. ETFs all have their differences however they are all still considered as silver ETFs. If you want to know more then you can search for a a number of silver ETFs by using Yahoo Finance, MSN Money or your check out what your own brokerage has to offer. Be sure to read more about the company that issues the silver ETF to make sure that you are looking at the right product. Hopefully these investing and financial planning tips will help you to find a silver ETF that is right for you.