What are Specified Investment Products (SIP) in Singapore
Investment vessels in the market are in different shapes and sizes. Some of them are easier to learn from a short term experience, and some of them can be worked out with the help of investment brokers. There are, however, some of the investment schemes that will need you to be crisp on knowledge about investment. Specified investment products or SIP are a channel of investment for retail investors. When an investor wants to put in smaller amounts of money in different vessels, SIP helps them build the portfolio that gives them regular returns. Retail investment keeps the scope of investment lower than other kinds of institutional investment. Retail investors looking for a way to earn regular dividends or interests on their invested money, generally choose to invest in SIP rather than traditional stocks and shares.
What are SIPs?
SIPs come under the kind of investment that is different than the traditional SGX stocks and shares. In SIP, the investor puts in a small amount of investment every month. The amount is used on different kinds of investment products like mutual funds, pension funds or retirement funds. Simply put, SIPs can expose you to more factors to deal into, with the amount of money you pay for investment every month. Though in SIPs, it is difficult to understand how the investments may affect the route of your wealth growth as the investments are made keeping in mind long term holdings. While investing in SIPs, you must know about the underlying investment terminology and factors that affect the gains or losses on the money you spend.
The Monetary Authority of Singapore has assisted retailed investment by classifying a specific line of investments as SIPs. In the case of SIPs, you have to buy your scheme from the financial institutions that sell SIPs. These institutions are instructed to assess the investment knowledge of the investor before selling them investment products.
The Monetary Authority of Singapore has assisted retailed investment by classifying a specific line of investments as SIPs. In the case of SIPs, you have to buy your scheme from the financial institutions that sell SIPs. These institutions are instructed to assess the investment knowledge of the investor before selling them investment products.
What are the Types of SIPs?
SIPs are an umbrella where you buy into a variety of investment products such as mutual funds, equity funds, or mortgage funds. When an investment vessel gets profits at the origin level, the percentage of it is distributed as dividends to all the investors and shareholders. There are, though, different types of SIP processes that require you to know separate investment platforms. Listed SIPs are the ones that are listed on the stock exchange as a commodity, and they are; structured warrants, Futures, and Daily leveraged certificates. There are then those SIPs that are not listed on the exchange, and they are; Equity-linked or Credit linked structured notes, some Unit Trusts, Investment-linked life insurance policies.
What is Required to Buy SIPs?
The financial institutions that you buy your investment plans from are required to examine the knowledge of the customer on investing. This is required to simply assess the information that you have about the characteristics of the investment plan and the risks associated with it because of its links to the volatility of the market. In any way, you wouldn’t ever want to invest somewhere without knowing what the consequences and risks would be. For listed SIPs, the institutions will take Customer Account Review or CAR to know a bit about your investment background. While in the unlisted SIPs, you must go through a Customer Knowledge Assessment or CKA that appraises your knowledge about the investment sector.
Customer Account Review
When you go for investment in the listed SIP sector, you are investing straight into the commodities on the exchange. So, the institution selling you thee plan is supposed to have the knowledge about your investment history, your educational qualification, and your work experience. During the CAR, there are three criteria to fulfill, and you can only buy into listed SIPs when you match at least one of these,
- You must have the relevant educational qualification
- Have professional finance-related experience
- Must have three years of consecutive work experience in the past decade
- Making six transactions in SIPs over the last three years
Your financial institution will then tell you if you’re experienced to take on SIPs. The review on your account will last you for three years if you have made just a single transaction into your account or have made no payments at all for three years. Else the account expires, and the institution has to take another CAR.
Customer Knowledge Assessment
Investing in the unlisted SIPs requires the institutions to know about your knowledge over the investment products that work differently than the rules of the stock markets. The institution must-see if you have a relevant educational qualification, the experience of your investment ventures, and your work experience. The criteria in the CKA that you must fulfil are;
- Having an education in the related fields
- Having financial qualifications about the investment sector
- Three years of work experience
- Must have bought at least six unlisted products or have topped products up more than six times
Unlisted SIPs are dicey unlike listed SIPs so you must go with the assessment results but still ask to enquire correctly if you’re actually ready for investing unlisted SIPs. Your CKA results will be valid for you a year. After the year ends, the institutions call for a fresh CKA before you buy products anymore. Its to make sure that your knowledge about the rules and policy remain in sync with even little changes.
If you do not pass the criteria listed in the Customer Account Review and the Customer Knowledge Assessment, you can still proceed to invest in the SIPs. But you must know about the risks and consequences of market volatility on your investment, and you will be the one responsible if a downfall occurs. This is the reason why it is still mandatory to have regular advice from the financial institution about safeguarding your money.
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