Introduction:
You can start investing in gold and silver with as low as Rs. 50. No making charges, no GST, no hassle of having a locker for the storage. The point is that using Rs. 50, you may not even be able to buy a pizza. But using this Rs. 50 rupees, definitely you can start investing in gold and silver. And you could do this by using gold and silver ETFs. And best part is that both gold and silver ETFs are regulated by SEBI. So you don't need to worry from a regulation perspective. In this blog post, we’ll see step-by-step process of how to start your SIP in both gold and silver using as low as Rs. 50.
Let's also have a look at perspective on the SIP returns of gold and silver together. So, if I talk about the data which is as of September 2025 if you did monthly gold plus silver SIP in both the precious metals and if you look at the last 15 years of time horizon you would have generated around 14.22% of SIP returns in 10 years, 19.73 in 7 years and 23.96% 5 years. Even better results with silver Last 3 years 39.74% and last 1 year 74.99%. Of course, last 1 year has been an exceptional year for gold and silver. We all know about it. By the way, these past returns do not guarantee the future returns. But SIP is all about not timing the prices of gold and silver. If I just talk about the last one year, it has been exceptional. If you look at the gold so far from 1st of January to 17th of November gold has gone up by almost 55%. If you look at the silver it has gone up by around 72%. And now the investors are divided into three camps. Camp number one is there are people who are saying that you know what the gold and silver has done a beautiful rally now and it is time for them to calm down. We will only invest if the prices come down. That is one perspective on gold and silver.
Second
type of investors are those who are saying that you know what we can't really
predict what will happen in future. These prices could go up or come down. We
rather do SIP in gold and silver. That's the second view. And the third
approach could be a hybrid view. For example, let's say you want to invest 5
lakh rupees in gold and silver. You might say that Rahul what I'm going to do
is you know 50% of this 5 lakh which is 2K 50,000 rupees. I'm going to keep it
for by the dip in case the prices crash. Okay. But the remaining 2 lakh 50,000
rupees what I want to do is start my SIP now because I don't know what the
future will be and to me that is very good sensible view of looking at gold and
silver allocation. If I just speak about SIP approach and if I just pick up
this Rs. 50 note and I say to you that let's do SIP of 50 rupees in gold and
silver is it possible? I'm going to show you that. But the main benefit of SIP
is that whether the prices in future go up or down, you are buying at an
average price. And that is the beauty of SIP. And last point before I show you
how to do SIPs is that when you are doing SIPs, you are actually building a
habit, a habit that may stick with you for long term and you might become a
disciplined investor. With that, now let me quickly show you how to go about
doing SIP in gold and silver together with as low as 50 rupees.
For
us to be able to start SIPs in gold and silver ETFs, we are going to need a
demat account. So, what I've done is I've logged into my Zerodha DMAT account,
right? What you see on the left side is I've got a lot of silver related ETFs
here and you can see the current prices etc. So that is one and the second you
have got is the gold ETFs. Now which ETFs to pick from here? Very quickly what
I'm going to do is show it to you some criteria. Okay. So, what I'm doing is
I'm going here on this ticker tape website and I've got a list of all the gold
ETFs. Since we want to start our SIPs which is as low as 50 rupees. What I'm
going to do is I'm going to sort this out by the closing price of these ETFs
from low to high. Right? So, at the top you see three ETFs which is Angel 1,
Tata and Zerodha. Again, none of these are recommendations but I'm just showing
you the logic here. If you look at these three ETFs, these three ETFs are
trading below 20 rupees of level. meaning that if I were to buy one unit of the
any of these ETFs then I can very well buy it at less than 20 rupees right from
a gold perspective now price is one parameter it doesn't mean that we have to
go by just the price okay what we need to look at is the liquidity also in
ETF's case so what I've done is I've added 3 months average volume here now
Angel one unfortunately there is no data here but for Tata and Zerodha I've got
some data here Tata's liquidity is very high in fact this is the most liquid
ETF as of account and the reason is very simple. This is almost cheapest. If
you look at the closing price as of yesterday it was only 12 rupees 18 pesa. So
therefore, it is quite cheap and hence the liquidity is very high. That could
be one logic. So, if you look at the liquidity here 3 months average volume
four cr 65 lakh 80,000 rupees of units have been traded right. If you look at Zerodha
very good liquidity again 72 lakh 12,621 both of them are highly liquid right
and that is another criteria that we are checking in. Next is the expense
ratio. So, if you look at the expense ratio here, Tata is slightly costlier as
of now and these expense ratio could change in future, right? So, 0.40 and 32.
Now you can very well make a decision which one you want to go with. I can't
give you any recommendation. It is up to you to select but you can select any
one of these maybe between number two and number three. You can choose one of
them because it is well below 20 rupees. If 50 rupees is not your limitation
here, then you can go and choose from any other ETFs.
Now
let's come to silver ETFs. So, what I've done is I've got 16 silver ETFs here. Again,
I have sorted them from low to high pricing. From pricing perspective there are
only two ETFs. Tata and Zerodha. Again, their closing price as of yesterday was
lower than 20 rupees. So, meaning if I were to buy one silver ETF, I can buy it
at less than 20 rupees and one gold ETF also I can buy at less than 20 rupees.
Meaning less than 40 rupees is what I will spend if I were to pick one ETF if
the prices remain more or less constant. I'll come to that point in a minute
right when I talk about the funding etc. But if you look at these two ETFs from
a volume perspective again very good liquidity in both of them Tata is 3 cr 35
lakh 75,000 Zerodha in the last 3 months average volume has been 91 lakhs so
which is a very good liquidity not worried about liquidity at all expense ratio
if you look at it Zerodha is slightly lower 344 you can compare the returns etc.
last 6 months 1 year etc. It is up to you to check out the returns but from
expense ratio and average volume perspective and from a closing price
perspective these two are fitting the bill nicely.
Now
let us now go back to our DMAT account and what we are going to do is we are
going to build our basket here. This is the first step that we are going to do.
So, we're going to simply click on new basket here and you can name this basket
anything. So, I'm going to say gold and silver ETF basket. It could be anything
really. So, simplicity gold and silver ETF. Now I create it. The next thing
what we need to do is add our ETFs into this basket. Right? For example
purposes what I'm going to do is I'm going to add Zerodha silver ETF into this
basket and from gold perspective I'm going to add tatas right so for example
here let's say silver case right so let's click on silver case and this is Zerodha
silver ETF now few things we need to note here one is it is nudging us that
silver ETFs are trading at a premium due to shortage of physical silver please
check the INF what is this concept let me very quickly show you so if I go to
this NSE website here what you note is that Zerodha silver ETF closing price is
around 15.80 at the time of writing this blog post and NAV is around 15.89
meaning that it is trading well below the INF price. INV is indicative NAV
price net asset value meaning that what is the underlying value of this one
unit of ETF that is 15.89 you're getting it at 15.80 which is a very good
thing.
Why
this is happening mainly because of the demand supply gap within an ETF. Please
make sure that this trading price should be lower than the INAF. If you're
doing that, it means you're getting it at discount. If this price is higher
than INAP, it means you are paying premium. Okay, hope that concept is very clear.
Now, if I come back to our Zerodha demat account here, second thing we need to
do here is that we have to make sure that market checkbox is clicked here. Why
so? because you're going to set up a SIP and the price at which you are going
to execute these orders automatically they need to be at market price because
you don't know what the prices will be if you set up a limit then you will have
to mention a price here and you don't know what the prices will be in future
and your orders might get automatically cancelled therefore please make sure
you put market here now how many quantities you need it is depending on how
much of SIPs you want to do whether you want to do 50 rupees 500 5,000 5 lakh
that is up to you right for simplicity I'm Just going with one quantity here
because I'm assuming that we are doing a 50 rupees of SIP. Now, next thing I
would do is simply add it here.
Right
now, it has added into our basket. We are not going to click in execute because
if you click on execute, what that simply means is that it is going to execute
the order if the market is open. So, don't do that. Right. Next thing we need
to do is add our Tata Gold ETF here. So, what we are going to say is simply
type Tata Gold. Okay. Once we type here, it comes here. We add it. Again, the
same process applies here. We're going to make sure it is on market. I'm again
going for one quantity here. And I simply said add here. Now both these ETFs
are added into this basket. Please make sure you're not pressing execute.
Simply close it. When you close it, what happens is that your basket is
created. You can anytime come edit it, delete it. If you want to edit it, you can
come back, edit the quantities and things like that. You can do a lot of
things, right? But now the next step will be to create a SIP using this basket.
So simply go to SIP and here you say create a new SIP.
First
thing you have to name this SIP. So, let's say I am saying gold and silver ETF
SIPs. I'm saying starting 3rd of December 2025. Why 3rd of December 2025? I'm
assuming that if you're a salaried person and if your salary comes let's say on
30th or 1st of every month then after 2 days you want to make sure that you are
investing some money from your salary into this right that's the naming
convention I'm going to follow next thing what we need to do is we are going to
click on this gold and silver ETF basket that we just created if you have multiple
baskets then you only select gold and silver this approach actually you can
apply to stocks as well if you want to have any other ETFs or stocks if you can
if you want to invest for example Nifty50 bas ETFs you could do that as well
right this is a simple approach you can follow for any other ETFs and stocks
right so here let's say the basket is gold and silver ETF now comes the
scheduling of it so let's say first of every month now I would say don't go for
first if your salary is coming on 30th because if there are one or two day
delays you want to make sure you've built that particular timeline so let's say
third of every month execution time when will Zerodha execute this order you
have to provide that input 9:30 now again you can choose whatever I generally
like to go somewhere around midday because in the morning when the market opens
there might be huge volatility when the market is about to close the volatility
generally goes high so midday might be a good way again there is no proof here
that this is going to give you better returns or not but from a simplicity
perspective 12:30 is what I have chosen and you simply click on create and you
will see this SIP coming up here it is active you can see that in the next 16
days it is going to get executed and this is a gold and silver ETF now if I
click on this you can go and edit it you can pause it, you can delete it, you
can do all of that. Right now, one thing here to note is that just because it
is active, it doesn't mean it is going to automatically go and take money from
your bank account. Please understand this very clearly. For this SIP to get
automatically executed everything, few things need to happen.
Number
one, in your funds, you need to have funds. So, for example, if this is getting
executed on third at 12:30, you need to have sufficient funds in your Zerodha
account. Right? Now either every month you can go manually and add the funds
depending on the prices because the prices will fluctuate. Right now if you look
at this basket right if I go and show you if I simply go and edit we are
showing here 27 rupees 75 pesa is needed to execute this but next month it
could be 30 rupees following month it could be 20 rupees following month it
could be 50 rupees we don't know right what the prices will be therefore one
approach is that every month manually you go into Zerodha add the funds and
before the execution date you need to add the funds therefore it is all done if
you want to automate the transfer of the funds from your banks to Zerodha that
also you can do. How to do that? Very quickly let me show it to you. For this
what you need to do is go to this SIP screen and click on these three dots say
edit and this SIP edit screen will open. At the bottom you will find set up a
bank mandate. So first of all click on that bank mandate. Once you do that
it'll bring you to the console page and where you will see this button called
create new mandate. If you've already created some mandates you will find them
here.
If
you have never done this just follow along. Simply click on create new mandate.
Once you click on that you will see your bank accounts coming up. So which bank
account that you want to transfer funds automatically every month you can
decide that. So, let's select any of these bank accounts and click on I accept
the terms and conditions and then you say continue. Now what you see here is
that it is going to DJ integration. Again, this is all very well automated.
What you see here is that you are giving a mandate here which is starting 17th
of November 2025 and it is going to go up to 16th November 2065 right and it's
asking you to now authenticate yourself either you can use debit card net
banking or Aadhaar I'm going to click on Aadhaar and see how this process goes
very simple process click on this click on Aadhaar then you submit and then
what happens is that it will take you to this screen where you will see all the
details of this mandate simply say proceed again you will see the terms and
conditions just simply click on the checkbox and continue. And here you will
have to enter your Aadhaar card details. Once you enter your Aadhaar card
details, you're going to get an OTP. This is mainly for verification. Once you
get your OTP done, you verify the OTP here. Submit and then once the OTP is
verified, it is going to say that your mandate is accepted and your mandate is
now set up. It takes roughly let's say 3 to 5 days for these mandate to be set
up in your account. And once this mandate is set up, what happens is that you
can go ahead and create a schedule. So for you to be able to create the
schedule automatically you go to the console again you will find your mandate
active after 3 to 5 days and simply you can set up a new schedule what you will
have to specify here is the schedule name again you can give it anything like
gold and silver ETF here you choose the date on which you want this transfer to
happen automatically you choose the frequency of it whether it's monthly or
quarterly in our case it could be monthly you enter the amount you might say
that you know 50 rupees 60 rupees 500 rupees whatever is your amount it will
automatically go and deduct it from your bank account and put it into Zerodha's
account. Make sure the date you're choosing is 2 days at least before your SIP
date so that at least that money is transferred from your bank account to the
Zerodha account and on the date of SIP it gets executed automatically. You
don't need to worry about anything.
The
only thing you need to keep an eye in this entire process is the silver prices
or the gold prices. If the prices are going very high then accordingly you will
have to just adjust your schedule amount here because this amount might not be
sufficient but this is a very simple process end to end process of how you can
go about setting up your gold and silver ETF SIPs. This I have shown you using
Zerodha. I do not know about other DMAT accounts. I'm sure you can figure this
out. It should be very straightforward simple process that I've shown you.
Last
point I want to talk about is now the taxation on gold and silver ETFs. Now
what you see on my screen is the gold ETF's taxation. Again, please make sure
you consult your tax advisor before making any decisions based on this
information. This is what I found on economic times. Now before 23rd of July
2024, there was one tax regime. So, if you bought any gold or silver ETF,
before that the rules were very different. But after 23rd July 2024, if you're
buying and selling gold or silver ETF, the taxation rules are very different.
Now for gold ETFs, current rules are that if you're buying after 23rd July
2024, short-term capital gain will be considered if you buy and sell it within
12 months, less than 12 months, right? In that case, whatever gain you make on
gold ETFs, you will have to pay based on your income tax slab for that
particular fiscal year. But long-term capital gain tax will arise if you are
holding it for longer than 12 months. And in that case, you will have to pay
12.5% flat with no indexation. That's the rule after 23rd of July. Before 23rd
of July, the rules were slightly different. The definition of short-term
duration was less than 36 months, meaning 3 years. And for long-term, it was
more than 3 years. And in fact, the tax rates were also very different. Slab
rate for short-term capital gain. And 20% with indexation was long-term capital
gain with for the gold ETFs and gold mutual funds. For silver, my research says
that it is exactly the same for the gold ETFs, but I found mixed information on
internet. At some places, I read that there is a change in the rule from 1st of
April 2025. Therefore, I'm not sharing that information with you. Please make
sure you consult with a tax advisor on the taxation for the silver ETF. I want
to make sure that you get it right, but it should be on the similar range in my
view.
Conclusion:
I hope you've learned a lot in terms of how to go about setting up SIPs not just for gold and silver ETFs for any ETFs you can follow the same process and in fact for stocks also you can follow the same process.
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#investingforbeginners #wealthbuilding #financialfreedom #mutualfunds
#stockmarketindiatips
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