A Lesson in Silver

My silly little silver investment has paid off, not in dollars, but in knowledge. I’ve not only learned how to read price charts now but I’ve also realized that there is a big difference between investing in precious metals and the stock market.

While silver, gold, and other precious metals might go up in price you never know exactly when that is going to happen. It is also something of a chore should you decide to sell. If you don’t sell it locally then you have to arrange for a sale with an online broker, package it all up, ship it to them, then wait for them to pay you.

That alone is a pain in the tukus.

The stock market, on the other hand, is a whole lot easier. You buy your stock, wait a bit for the price to go up, then press a few buttons to sell it. You’ll get paid within minutes. I learned this after making a few experimental trades with my new brokerage account. I made a $40 profit just playing around in the past couple of weeks, while the value of my silver has essentially remained flat.

Even better, I’ve learned that certain stocks issue dividends. Buy these stocks and you will receive a small amount of money every one to three months (depending upon how they do their accounting). They are like buying a cow and then selling the milk!

If I can learn how to combine the two methods of investing for dividends and harnessing stock price increases, I should be able to grow my little nest egg into a tidy profit over time. It won’t be overnight, especially with the current stock market fears, but it’s something to look forward to.

In essence, my silver investment may have ended up being a short-term bust, but it taught me more than I would have learned had I not experimented. I’ve even gotten a little memento to keep in my pocket to remind me of what I’ve learned.

What have you learned from your mistakes? Please share your stories in the comments below.

13 thoughts on “A Lesson in Silver”

  1. I think your silver investment is not a short-term bust at all. Precious metals like gold and silver are one of the safest investments. As it is safe, the return is low. Stock market and mutual funds involves high risk, so the return is usually high. If you want to make a portfolio of investments I feel it is a good idea to have some investments in precious metals. Moreover, you bought silver coins, not silver jewelry. For coins you will get more price than jewelry. I am not a financial advisor but I feel your actions are on right path. Silver and stock both are right.

    1. That is a VERY good point Ajita. I explored gold as well but decided against it. I had a hunch that the price was far too high and I was correct. The price of gold has dropped almost $200 an ounce since I started this so you are correct–it wasn’t a bust. Thank you for pointing that out.

  2. Yes, there’s a big difference in buying silver and buying stocks…and you have described the difference very well. A little silver is nice though. The stock market can be a very tricky place. Have you discovered the Aristocrats fund yet? It’s a good source to find stocks that pay dividends.
    Thanks again for sharing your journey.

    1. Hi Karen!

      I’ve discovered quite a bit of different methods for investing in the stock market. At the moment, I’m experimenting with different ways and methods while I figure things out. I’ve got to work out a way that I can adapt, not only to my current circumstances, but for others who come after me who want to learn how to do this when they have very little money to start with. It’s a tall order, but I’ll figure it out :).

  3. Becareful of how often you sell your stock. When you sell and earn a profit you will be paying taxes on amount earned to the IRS & could be pay fees to the company for the sells transactions. Just a reminder. I’m sure you have check on the fees with your brokerage account.

    1. Hi Sharon!

      Thanks for your timely reminder. At the brokerage I selected it costs $6.95 to trade. On 100 shares, that means that the price needs to rise a minimum of fourteen cents a share in order for me to simply break even. Should I purchase smaller lots the gain required for breakeven goes up exponentially.

      As for taxes, any profit from stock that you own for less than a year is counted as regular income so I do have to factor that in. Fortunately, my overall income is so low at this point that I highly doubt I will reach $10,000 in income this year between my paycheck and my investments though I am keeping an eye on it. Dividends, from what I understand, are counted as investment income, which is taxed at the same rate as my book royalties. I’ll understand more about how it specifically works come tax season next year.

  4. I’m not a finance professional, but I am saving for my retirement. Does your employer offer any tax deferred retirement savings plan, like a 401k? Look into that or funding an IRA/Roth IRA? Look into “Indexed Funds” with low fees. Fund your retirement account and leave the money in there to accrue compounded interest. I’ve read that small investers do best with indexed funds. Your relatively small amount of money is diversified which weathers ups and downs in the market better than all your money in 1 company’s stock. Good luck!

    1. Hello Zoe!

      I’ve already asked about their 401k. I do not qualify since I am only part-time. My manager even asked the owners if they would consider an exception for me since I plan to stay there long-term but they refused to budge. That’s okay. There is more than one way to “skin a cat.”

  5. Like your other commenters, I wouldn’t consider your silver to be a bust. The thing about precious metals is that while the price per ounce may fluctuate, they are never going to lose their value completely. The same cannot be said of stocks – a company can go belly up and you can lose everything. So I think you have to think of the silver as a long term security sort of thing rather than an income generating investment.

  6. There are retirement accounts that are age related–they invest in riskier things when young to get the most benefit then get more conservative as you age when won’t have as much time to recover any loss. You don’t get immediate income from those but they can make the future better.

  7. I have a nice mixture of monthly and quarterly paying dividend stocks. In retirement a monthly check is nice and my larger quarterly checks covers my less frequent bills. As always, don’t put all your money in one basket. If you don’t know about “dividend achievers” please look it up. REITs are another great thing to know about. Good luck and keep investing, it is the only way to beat inflation.

  8. I’m with Zoe. Even if it is not in a Roth IRA an INDEX Fund is the way to go. The expenses are much cheaper. You ride the market and it adjusts automatically with out the expenses of trading. I would not buy anything that is not INDEXED.

    You need to research INDEX FUNDS and pick which type of fund you would like to be in. Then you just buy and hold. I have done VERY WELL with this method of investing.

  9. Well, there is an advantage to physically owning things like silver or gold, in that it is much harder to hack into a safety deposit box than an online account.

    Also, I agree dividends are very useful, and choosing stocks that regularly pay them is a good idea.

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