New investment option SIF is being launched in the country! Learn how to separate from SIP and who can invest
What is sif: Are you among those investors who are investing in mutual funds through SIP (Systematic Investment Plan)? If yes, get ready, because a new and highly interesting investment option is knocking in the Indian market, which can be more flexible and attractive than SIP: SIF (Specialized Investment Fund). This new option can prove to be a game changer for those investors who want more control and compatibility in their investment strategy.
What is SIF (Specialized Investment Fund),
In SIP (Systematic Investment Plan), you invest a certain amount in mutual funds on a fixed date every month. It gives the benefit of discipline and compounding. But SIF gives an opportunity to take advantage of market volatility by going one step ahead.
SIF is not a completely new financial product, but it is a ‘strategy’ that some advanced brokerage platforms or fund houses are now going to offer as an ‘option’. It can also be called ‘Value Averageing Investment Plan’ (Vaip) or ‘Flexible SIP’.
How does it work SIF?
According to SEBI rules, those investing in SIF will have to invest at least Rs 10 lakh. Investment starts at Rs 10 lakh. SIF comes with Open Ended, Close Ended and Interval Ended Options, in which investors can choose their own period.
1. Fixed target, Flexible Investment: Like SIP, you do not invest a certain amount every month, but you aim to reach a certain ‘value’ (price) every month.
2. Advantage of Bazar fluctuations:
- When the market is down (unit cheaper): In SIF, when the NAV (net asset value) of mutual funds falls, you buy more units to meet your goal, that is, you invest more money.
- When the market is up (unit expensive): When NAV grows, you buy less units to reach your goal, that is, you invest less money.
3. Better average cost: This strategy helps you buy more units at a lower price and prevents you from buying low units at a higher price, which improves your average purchase cost and can increase potential returns in a long time.
Sif Who can invest in,
SIF can be an excellent choice for investors that:
, Do the understanding of the market: Like SIP, it is not completely ‘set and forgate’. It may require understanding and monitoring a little, although it can also work automatically.
, Willing to take a little more risk: Although it helps in reducing the risk, your monthly investment amount varies in it.
, Want to invest for a long time: SIF also gives better results for long periods like SIP.
, Looking for more returns: Historically, the Value average strategy has given a slightly better return than the SIP, especially in unstable markets.
, Regular income investors: Those who have a certain income every month can easily manage SIF.
Sif Benefits and challenges of
Benefits:
, Possibility of better returns: Taking advantage of market volatility optimizes the average purchase cost.
, Self -reliance and control: You get more control over your investment strategy.
Challenges:
, Increased investment: You may have to invest more than SIP when the market falls, for which you have to be mentally prepared.
, Availability: Right now it is not widely available on all fund houses or brokerage platforms, but it is gradually increasing.
Sip Vs. Sif: What is better,
SIP is fantastic for investors who want simplicity and discipline. This is ideal for new investors. SIF may be better for experienced investors who understand the market a little more and want to adopt a smart strategy to maximize their returns.
As the Indian financial market is maturing, new and sophisticated options are coming out for investors. SIF is definitely an option that should be considered, especially if you want to benefit more than your investment. Taking advice from your financial advisor, learn whether SIF is right for your investment strategy!
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