How Can I Invest in Silver as a 25-Year-Old?

Ans: Hi Nalin, you have 2 options

Option 1 - you can invest in an FOF fund investing in Gold. In future when you want to buy physical Gold you can redeem your investment and buy Gold from proceeds. Thus, way you cs the encash the upswing I have Gold rates.

Option 2 - you can invest in an overnight fund and can reduce risk to almost zero and can grow it too to a certain extent. And whenever you want to buy Gold you can exit overnight fund and buy Gold from proceeds

Ans: Silver mutual funds primarily invest in silver or silver-related assets. These funds aim to track the performance of silver in the market. They are volatile due to price fluctuations in the precious metals market. While they can diversify your portfolio, they come with risks.

Assessing Your Current Investment
You are already investing in Sundaram Multi Asset Allocation Fund through SIP. This fund diversifies across equity, debt, and other asset classes, potentially including gold and silver.

Benefit: It provides exposure to multiple asset classes, balancing risk and reward.
Drawback: Adding a silver mutual fund may duplicate your exposure to silver indirectly through this fund.
Points to Consider Before Investing in Silver Mutual Funds
1. Understand the Risk

Silver prices are influenced by industrial demand and global trends. This makes it highly volatile.
Returns may not be steady compared to equity or debt funds.
2. Evaluate Your Financial Goals

If your goal is wealth creation over a long period, equity-focused funds may be better.
If you are looking for hedging against inflation, gold may offer more stability than silver.
3. Diversification Balance

Diversification is essential but over-diversification can dilute returns.
Adding silver should be based on your overall asset allocation. If you already have exposure through Sundaram Multi Asset Allocation Fund, silver-specific investment may not add much value.
4. Liquidity

Silver mutual funds have liquidity constraints as they depend on underlying silver markets.

Alternatives to Silver Mutual Funds
1. Continue with Multi-Asset Funds

Multi-asset funds already balance equity, debt, and commodities. Stick to your existing SIP.
2. Consider Actively Managed Equity Funds

Equity funds may offer better long-term returns and wealth creation opportunities.
3. Increase Exposure to Debt or Gold

If you want to hedge risks, increase your allocation to gold or balanced funds.
When Should You Consider Silver Mutual Funds?
You have a high-risk appetite and understand silver market dynamics.
Your portfolio lacks sufficient diversification in precious metals.
You can hold the investment for the long term (5-10 years) to mitigate volatility.
Final Insights
Investing in silver mutual funds is not necessary if your Sundaram Multi Asset Allocation Fund already includes silver exposure. Instead, consider focusing on equity or balanced funds for consistent long-term returns. Ensure your investment strategy aligns with your financial goals, risk tolerance, and time horizon. Regular review and disciplined investing will help you achieve your objectives.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment