SIP in ETF Vs SIP in Mutual Funds | Best Way to Invest in Share Market

Summary

In this video, the host introduces a unique ETF investment strategy using SIP principles, where small, regular investments are made daily based on market movements. By tracking the market at 3 PM every weekday, viewers can identify which ETFs are down and invest in those, maximizing returns over time. This strategy is designed for individuals who can spare a few minutes daily, offering a simple, yet effective way to accumulate wealth through ETFs. The host explains how this method works with various types of ETFs and how they can be used to hedge against market downturns.

Takeaways

• 😀 Systematic Investment Plans (SIP) can be applied to ETFs, not just mutual funds, to build wealth over time.
• 😀 A small daily effort of 5 minutes can significantly improve returns by investing in ETFs that are currently priced lower.
• 😀 Set a daily alarm to check market performance and track which ETFs are down for optimal buying opportunities.
• 😀 Diversify your ETF portfolio with at least 5 ETFs across sectors like banking, IT, FMCG, mid-cap, and small-cap.
• 😀 Including Gold and Silver ETFs can hedge your portfolio against market downturns.
• 😀 Invest your monthly savings daily, splitting the total into equal parts for each trading day, to take advantage of dips in ETF prices.
• 😀 Use limit orders when necessary to buy ETFs at preferred lower prices without overpaying.
• 😀 Small-cap and mid-cap ETFs offer higher long-term returns if accumulated during market dips.
• 😀 Adjust your portfolio risk according to age using the 100-age formula (e.g., younger investors can take more equity risk).
• 😀 Consistent, disciplined investment in ETFs over the long term can outperform traditional passive SIP returns in mutual funds.
• 😀 Investing in ETFs allows exposure to a diversified set of top companies within sectors, reducing individual stock risk.
• 😀 Monitoring and acting on short-term dips can enhance accumulation and maximize long-term wealth.

Q & A

What is the main topic of the video?

The video explains how a person can systematically invest in ETFs using a SIP-like approach, with a small twist to potentially increase returns.

What is the small twist suggested in ETF SIP investing?

Instead of investing blindly on fixed dates, you check daily which of your selected ETFs is currently down the most and invest in that one, maximizing returns by buying during dips.

How should a monthly investment be divided for this strategy?

The monthly investment is divided into daily amounts based on the number of trading days, for example, investing ₹20,000 per month would translate to approximately ₹1,000 per trading day.

What types of ETFs are recommended in this strategy?

The video suggests a mix of equity ETFs (like BankBees, Nifty Bees, Mid Cap, Nifty Next 50, IT, FMCG, CPSC) and commodity ETFs (gold and silver) for portfolio diversification and hedging.

Why does the video recommend setting a daily alarm?

A daily alarm helps track market trends and identify which ETF among your chosen list is currently down, allowing you to invest strategically rather than blindly.

How does investing in ETFs differ from investing in individual stocks?

ETFs are baskets of stocks within a sector or index, reducing individual stock risk while providing exposure to multiple companies, whereas investing in a single stock carries higher individual risk.

What is the purpose of including gold and silver ETFs?

Gold and silver ETFs act as a hedge to protect the portfolio in case of a market correction, reducing overall risk.

How does age influence the choice of ETFs according to the video?

Using the 100-age formula, younger investors can take more equity risk (e.g., 80% equity at age 20), while older investors should reduce equity exposure and focus on safer investments.

What are the historical returns mentioned for different ETFs?

From May 22, small cap ETF returned 91%, mid cap 89%, Nifty Next 50 97%, Nifty ETFs 37%, BankBees 23%, and silver ETF around 15–16%, demonstrating the potential gains of strategic investing.

What is the main benefit of the proposed daily monitoring approach?

By investing in the ETF that is currently cheapest each day, the strategy accumulates more units at lower prices, which can lead to significantly higher long-term returns than a fixed-date SIP.

Can investors adjust the number of ETFs they track?

Yes, investors can choose fewer than five ETFs if they invest smaller amounts or more if they can invest more, depending on their capacity and risk tolerance.

How should limit orders be used in this strategy?

Limit orders can be placed to ensure purchases are executed at a target price, preventing overpaying, but should not be set too far from the current price to avoid delays in execution.