ING ZIP: Zoom Investment Pac ZIP from ING

ING Investment management has come out with a unique concept of ING ZIP or Zoom Investment Pac (ZIP). This is basically a SIP or Systematic Investment Plan but the difference between SIP and ZIP is that ZIP is a daily investment scheme while SIP is usually monthly or higher duration.

What is the Zoom Investment Pac ZIP from ING all about?
The Zoom Investment Pac (ZIP) is a systematic investment medium like a SIP with a daily frequency rather than monthly. But the catch here is that you will first have to invest a lumpsum amount in ING Liquid Fund and only after that a pre-determined amount (as selected by the investor) will be transferred into the existing equity schemes of ING Mutual Fund on a daily basis from this initial investment.

What is the benefit of Zoom Investment Pac ZIP from ING?
The Zoom Investment Pac ZIP from ING claims to come with a benefit of Better Averaging Concept, as compared to SIP. Since the money is invested on a daily basis, the averaging is better than the monthly averaging. Hence, the averaging benefits are more compared to a SIP.

However, this is highly subjective. Just to take an example, if I invest one time 30,000 for 3 months when a stock price is 10. After 3 months, the stock price may be 20, hence my profit is doubled or 100%.
If I go for monthly SIP, and at the 3 instalments, I put 10,000 each at price of 10, 20 and 24, then my average price is 18. Hence, at the close price of 20, my profit is just 2 or a little over 11%.
If I go for daily averaging (like this Zoom Investment Pac ZIP from ING) then my average price may vary a lot. Hence, nothing is certain. It all depends upon which direction the price movement takes.

Another claimed benefit is that daily ZIP amount can be as low as 99 Rs. Fine, but that would mean that in a month you will have to pay 22 days * 99 = approx. 2200 Rs., if you go by business days.
So whether you opt for monthly SIP or daily ZIP, the amount which you will have to shell out would be almost similar on a monthly basis.

What are the disadvantages of Zoom Investment Pac ZIP from ING?
It is my understanding that a disadvantage with this Zoom Investment Pac ZIP from ING is that you will have to give them a cheque on the entire amount upfront. So the money might be debited from your account and hence you will loose interest on that. In case of a monthly SIP, your money is debited from your account only at the end of each month, hence you may not loose the interest. Though nothing is mentioned about this on the ING website, I believe that “One Cheque" would obviously mean asking the investor to pay the amount upfront.

Another disadvantage is that the Zoom Investment Pac ZIP from ING requires you to put in a minimum investment of Rs. 5000 in ING Vyasya Liquid Fund.
The schemes available for investment are ING Tax Savings Fund, ING Domestic Opportunities Fund, ING Select Stocks Fund, ING Nifty Plus Fund, ING Dividend Yield Fund, ING Midcap Fund, ING A.T.M. (Against the Market) Fund and ING L.I.O.N. (Large Cap, Intermediate Cap, Opportunities, New Offerings) Fund. All these schemes have the standard 2.25% entry load charge while the CDSC for schemes other than Tax Savings Fund is 0.5%. This again translates to huge cost for the investors.
There are no details available about how this 99 Rs. daily investment will be charged the load.

Related: ICICI Prudential Top Up plan in SIP

What are the minimum amounts under the Zoom Investment Pac ZIP from ING?
• The minimum transfer amount in case of ING Tax Savings Fund is Rs. 500 and further in denominations of Rs. 1000, Rs. 1500, Rs. 2000 and Rs. 5000.

• The minimum transfer amount in case of any other equity schemes is Rs. 99 and further in denominations of Rs. 199, Rs. 499, Rs. 999, Rs.1999, Rs. 4999.

• One can choose any other daily transfer amount other than the ones specified above. However, this amount cannot be less than Rs. 99 in case of “Other Equity Schemes". In case of ING Tax Savings Fund, the amount should be at least Rs. 500 and in multiples of Rs. 500 thereafter.

• The daily transfer amount cannot be changed at a later date.

Interested investors who believe that Zoom Investment Pac ZIP from ING is the right plan for them and they can afford to make daily payments with the required amounts and believe to benefit from daily cost averaging factor, can opt for this Zoom Investment Pac ZIP from ING.