How To Invest In Silver?

Updated on: January 25, 2026

When it is a question of precious metals, the limelight goes solely to gold. However, in recent times, silver has become a star of sorts in the background.

In 2025, the prices of silver increased by a whopping 168% alone, outperforming gold and all other investment alternatives. In the past 5 years, silver has generated returns of nearly 290%. With its high industrial demand, registered at 680.5 million ounces in 2024, and rising investor appeal, silver is creating a buzz for 2026 itself.

If you are looking for ways to invest in silver, this easy-to-follow guide will introduce you to all the worthwhile methods available and assist you in making the right choice.

Why Invest in Silver?

Before jumping into “how”, let’s quickly see why silver is worth considering:

High growth potential: Silver has given very strong returns in recent years.
Industrial demand: Used in solar panels, electronics, EVs, and more, so demand keeps rising.
Hedge against inflation: Like gold, silver can protect your money when prices go up.
Portfolio diversification: Adds a different asset class to your mix of stocks, FDs, and gold.

Now, let’s look at the different ways to invest in silver in India.

1. Silver Fund of Funds (FoFs)

A Silver Fund of Funds (FoF) is a mutual fund that invests in a silver ETF of the same fund house. It’s one of the easiest and most popular ways to get exposure to silver without handling physical metal.

How It Works:

The FoF does not buy physical silver directly.
It buys units of a silver ETF (for example, Axis Silver FoF invests in Axis Silver ETF).
The ETF’s returns track the domestic price of physical silver.

Key Features:

Minimum investment: As low as ₹100 via SIP or lump sum.
No need to worry about storage, purity, or security.
SEBI-regulated, so it’s safe and transparent.

Who Should Choose This?

Beginners who want a simple, low-cost way to invest in silver.
Investors who already use mutual funds and SIPs.

2. Silver ETFs (Exchange Traded Funds)

A Silver ETF is a mutual fund scheme that invests in physical silver bullion of 99.9% purity and aims to track the domestic price of silver (based on LBMA Silver spot price).

How It Works:

Each unit of the ETF is backed by real silver stored in secure vaults by SEBI-approved custodians.
ETFs are listed on stock exchanges (NSE/BSE) and can be bought/sold like shares.

Key Features:

You need a demat account to invest.
Returns are linked to the price of physical silver (subject to small tracking error).
No GST on the ETF units.

Who Should Choose This?

Investors comfortable with the stock market and demat accounts.
Those who want direct exposure to silver prices with low costs.

3. Digital Silver

Digital silver lets you buy silver online in electronic form. Each unit you buy is backed by physical silver (usually 99.9% pure) stored in secure vaults by the platform.

How It Works:

You buy digital silver units on apps like Paytm Money, Gullak, or similar platforms.
The platform stores the physical silver on your behalf.
You can sell anytime or even take physical delivery (if the platform allows).

Key Features:

Easy to buy and sell online.
No need to store heavy coins or bars at home.
Not uniformly regulated (offered by private platforms).

Who Should Choose This?

Tech-savvy investors who prefer app-based investing.
Those who want silver exposure without the hassle of physical storage.

4. Physical Silver (Coins, Bars, Jewellery)

This is the traditional way: buying silver in tangible form like coins, bars, utensils, or jewellery.

How It Works:

Buy from jewellers, banks, or bullion dealers.
You own the metal and store it yourself (home, locker, etc.).

Key Features:

You pay making charges and GST (3% on silver + 5% on making charges for jewellery).
Risk of theft or damage if not stored safely.
Liquidity depends on the seller and purity.

Who Should Choose This?

People who like to “see and touch” their investment.
Those who also use silver for gifting or cultural purposes.

Taxation on Silver Investments

Tax rules differ based on how you invest in silver. Here’s a simple breakdown:

Investment Type	Holding Period	Capital Gains Tax	Indexation	GST / Other Charges
Silver FoFs	< 24 months	Taxed as per income tax slab	No	No GST
	≥ 24 months	12.5% LTCG (+ surcharge & cess)	No	No GST
Silver ETFs	< 12 months	Taxed as per income tax slab	No	No GST
	≥ 12 months	12.5% LTCG (+ surcharge & cess)	No	No GST
Physical Silver (coins, bars, jewellery)	< 24 months	Taxed as per income tax slab	No	3% GST on silver + 5% GST on making charges
	≥ 24 months (purchased on/after 23 July 2024)	12.5% LTCG	No	GST paid at purchase
Digital Silver	< 24 months	Taxed as per income tax slab	No	Platform/storage fees may include GST
	≥ 24 months	12.5% LTCG	No	Platform charges may apply

Note: Indexation benefit is not allowed for silver investments in India.

How to Choose the Right Silver Investment?

Here’s a quick checklist to help you decide:

1. For Beginners & SIP Investors

Go for Silver FoFs.
Start with ₹100–₹500 via SIP.
No demat account needed.

2. For Stock Market Investors

Choose Silver ETFs.
Need a demat account.
Best for those who already trade or invest in stocks/ETFs.

3. For App-Based & Digital Investors

Try Digital Silver on trusted platforms.
Easy to buy/sell, but check the platform’s reputation and fees.

4. For Traditional Buyers

Buy physical silver coins or bars from reputed sellers.
Avoid heavy making charges on jewellery if investing purely for returns.

Tips Before Investing in Silver

Don’t put all your money in silver – Keep it as a small part of your portfolio (5–10% is common).
Compare costs – FoFs and ETFs have lower costs than physical silver with making charges.
Check purity – For physical silver, always buy 99.9% pure coins/bars with proper certification.
Think long-term – Silver can be volatile; hold for 3–5 years or more for better returns.
Track industrial demand – Rising use in solar, EVs, and electronics can support long-term prices.

The Bottom Line

Silver is no longer just a “second metal” — it’s becoming a serious investment option for 2026 and beyond. Whether you prefer mutual funds, ETFs, digital silver, or physical coins, there’s a way to invest that fits your style.

Simple Rule:

New investor? Start with a Silver FoF via SIP.
Comfortable with stocks? Go for Silver ETFs.
Want digital convenience? Try Digital Silver on trusted platforms.
Prefer physical? Buy coins/bars from reliable sellers.

Whichever method you choose, make sure it aligns with your risk profile, goals, and overall portfolio.

Learn More:

Frequently Asked Questions (FAQs)

Q1. What is the best way to invest in silver for beginners?
For beginners, a Silver Fund of Funds (FoF) is the easiest and safest option. You can start with as little as ₹100 via SIP and get exposure to silver without handling physical metal.

Q2. Do I need a demat account to invest in silver?
Yes, for Silver ETFs and some digital silver platforms, you need a demat account. For Silver FoFs, you can invest directly through mutual fund platforms without a demat account.

Q3. Is digital silver safe?
Digital silver from reputed platforms is generally safe, but it’s not uniformly regulated like mutual funds. Always check the platform’s reputation, storage partners, and fees before investing.

Q4. How is silver taxed in India?
Short-term gains (less than 12–24 months, depending on the product) are taxed as per your income tax slab. Long-term gains (after 12–24 months) are taxed at 12.5% (plus surcharge & cess). Indexation is not allowed.

Q5. Can I take physical delivery of silver from ETFs or FoFs?
Most Silver ETFs and FoFs do not allow physical delivery. They are designed for price exposure, not for taking home silver coins/bars.

Q6. Should I invest in silver jewellery for returns?
If your main goal is returns, it’s better to avoid jewellery because of high making charges and GST. Instead, go for silver coins, bars, ETFs, or FoFs.

Disclaimer

This blog is for educational and informational purposes only and should not be considered as investment, financial, or tax advice. Silver prices are volatile and past performance does not guarantee future returns.

Always consult a SEBI-registered financial advisor and a tax professional before making any investment decision. The author and publisher are not responsible for any losses or decisions based on this content.

Investments in securities and commodities are subject to market risks. Read all related documents carefully before investing.