Smart SIP v/s Normal SIP: Which Is Better?

The best way to invest in mutual funds is considered to be SIP. But now the era of Smart SIP has come, not SIP (Systematic Investment Plan) but smart SIP. Smart SIP gives you more benefits than normal SIP. Anyways if you are seaching for investments online than you are already ahead of 96% of Indians as only 4% of people in india invest in these markets.

If you are unfamilar with the term Smart SIP then this article could be a life saver for you cause today we will tell you about smart SIP, which is considered superior to normal Sip.

Here is everything you should know about Smart Sip:

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Smart SIP v/s Normal SIP

Smart SIP v/s Normal SIP

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Talking about Smart SIPs, Omkeshwar Singh, Head, RANK MF SAMCO, says that the times are changing and along with it the investment methods are also changing. In the smart era, new and smart ways of investing have come. Hence Smart SIP is also a new and smart way to invest in Mutual Funds. This system works on the principle of ‘buy low and sell high’.

How Smart SIP Works

Actually, Smart SIP invests by watching the market movements whereas, Regular SIP invests money in selected funds in every situation. Through Smart SIP, you can invest in liquid funds during high risk and increase investment in equities when the risk is low. In this way, Smart SIP fetches higher returns.

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Benefits Of Smart SIP

In Smart SIP, the parameters are fixed to decide the value of the scheme. The risk position is measured through the NAV. If the margin of safety is less, then the fund will be in a safe place. In such a situation, SIP is invested in liquid funds. And if the margin of safety is good then the money will be invested in equity.
Difference between SIP and Smart SIP

In a regular SIP, installments are paid every month, and investments are made in equity funds. In a normal SIP, equity funds invest money even when the risk is high and equity funds are invested even when the risk is low. In a regular SIP, money is invested in fixed funds.

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Smart SIP is a bit smarter than regular SIP. Investing in this is based on the volatility in the market. If the risk in the market is low then the investment is made in equities and if the risk in the market is high then the investment is made in liquid funds. In this way, the investor gets more profit and the risk is less.

Smart SIP: Returns

Smart SIP is more beneficial than regular SIP. There is no risk management system in regular SIP. Whereas, investment is done by knowing the risk in Smart SIP. Therefore, the returns from Smart SIP are expected to be higher as compared to regular SIPs.

Smart SIP and Normal SIP Example:

Investment HorizonTotal Amount Invested (Rs.)Current ValueXIRR Returns (%)
NORMAL SIP
3 Years36,0001,0685.11%
5 Years60,0002,6239.32%
7 Years84,0004,33512.24%
SMART SIP
3 Years36,0001,1025.33%
5 Years49,0002,16210.82%
7 Years95,0005,47913.32%
Smart SIP and Normal SIP Example

Trigger Based SIP

Many fund houses also offer trigger-based SIPs. The benchmark index has arrived at a particular valuation. In this case, the number of investments changes. Kotak Mutual Fund offers a Flexi SIP facility.

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