Daily SIP v/s Monthly SIP: Types of SIPs based on tenure, Which one is Better? (2024)

FAQs

Daily SIP v/s Monthly SIP: Types of SIPs based on tenure, Which one is Better? ›

You would be better off going for monthly SIPs over daily SIPs if you get a fixed salary each month. You could opt for SIP dates close to your salary date for convenience.

Hence, there will not be a big difference between monthly SIP and daily SIP. Investment term – The daily SIP is ideal if you're looking for long-term returns. The cost-averaging will be better and you can achieve high returns with daily SIP. You can also use SIP calculator online tool to analyse the SIP returns.

Therefore, the most recommended period for SIP investment is monthly. While deciding to choose a SIP investment option, it is also crucial to keep risk part in mind and not only the cash flow part.

You should have a monthly systematic investment plan because your income is monthly. Your salary comes once every month and you budget your expenses on a monthly basis as well. This is why your investments are better off monthly too.

A regular SIP best suits all kinds of investors who have a regular source of income and who prefer saving up for a secured future. A step-up SIP helps reach the financial goal faster and helps in accumulating a higher amount of corpus as the investment keeps increasing every year.

No matter what the past data suggests, there is nothing to prove that a daily SIP will do better than a monthly one in the future. So it's best to select your SIP frequency based on your investment time horizon (anything above a few years you should simply opt for monthly SIPs) and your own convenience.

According to research, the frequency of SIPs, whether daily, weekly, or monthly, has no significant impact on returns. For example, the difference in return between daily, weekly, and monthly SIPs is small over time.

Multi-cap schemes are more volatile than large-cap or mid-cap schemes, but they also have higher ROIs than both types of SIPs. These SIP with best for investing for investors who want high returns but don't mind taking on some risk with their investments.

Yes. In fact, it is better to invest in SIP for the long term. Instead of waiting and accumulating money to invest, you start investing whatever amount you are able to save. This way, your money is always invested.

Which fund is best for daily SIP? ›

With Daily MF SIP, you invest a fixed amount of money through the SIP route in a Mutual Fund every business day. Daily SIP strategy of investing a small amount every day, averages the cost of holdings more effectively by participating in the entire market cycle.

To create wealth through SIP investments, tenure of a minimum of 5 years is recommended by a majority of experts.

' Here, you will not incur income tax on SIP returns if they are below ₹1 lakh for a financial year. This rule will apply to long-term and short-term capital gains from equity-based mutual funds.

Daily SIPs make it very tedious to track investments and returns. Also, you will have multiple entries of purchase of the SIPs in your account, making it difficult to track all assets in one go.

Risk 1: The risk of SIP getting a negative return or price risk. Mutual fund investments are subject to market risks, is a commonly heard term. What this means is that your investment in a SIP can go down and you can end up with a value lower than what you invested depending on how the market behaves.

Over long periods of time, the frequency of an Equity SIP does not make any significant difference to overall returns. The returns are almost similar across all frequencies. Contrary to popular perception, doing a daily or weekly Equity SIP does not give any significant advantage over a simple monthly Equity SIP.

Through an SIP, you can invest a small sum on a regular basis. The frequency of SIP can be weekly, monthly, quarterly or bi-annually, as per your comfort. The other way of investing in mutual funds is via a lump sum.

Is it good to stop SIP now? ›

Keep your SIP on until you score your goals

Pausing or stopping your SIP will not only shrink your wealth, but also keep you from meeting the financial goals that you may have set out to achieve. Another important reason to choose the SIP route for investing in the equity markets is to avoid timing the market.

Yes, one should have multiple SIPs, each associated with a different purpose or goal. Also, remember to invest in various categories to facilitate a diverse portfolio.

According to Post Office RD Calculator, if you invest Rs 5,000 per month for five years the total return on your investment will be Rs 48,740 (with monthly compounding frequency). So the total amount that you will get after five years would be Rs 3,48,740.

The power of compounding manifests in SIP when individuals reinvest their earnings and earn further interest on them in due course. It is one of such features of SIP that helps an investor with a limited sum of money to generate wealth over time.

Calculation of SIP returns

To understand this, let us take an example. A monthly investment of Rs 5,000 for 10 years at an expected rate of return of 12 per cent will earn you Rs 11.61 lakh.

If someone begins a SIP of 5000 per month for a span of 20 years, at 12% assumed annualized rate of return per annum, your total investment in 20 years is Rs. 12 lakh and the accumulated corpus at the end of tenure is close to Rs. 50 lakhs.

Can I invest 100 rs daily in SIP? ›

A Systematic Investment Plan (SIP), popularly known as SIP, is one of the most convenient modes of investment. Rs. 100 SIP allows an investor to invest a fixed amount of money as low as Rs. 100 in the selected Mutual Fund Scheme.

You may consider pausing SIPs if you have insufficient funds for your daily needs. However, it's advisable to maintain at least three months worth of SIPs in your emergency fund to ensure the continuance of investment to attain long term financial goals.

SIP Tax Benefit

This means, the amount invested, the amount on maturity and the withdrawal amount all are tax-free. With SIP in ELSS fund, one can claim a deduction of up to Rs. 1,50,000 per year.

However, there is no guarantee or assurance of returns by investing in a SIP. This is because a mutual fund scheme invests in a basket of securities in different proportions. For example, a large-cap fund could have 30-40 stocks in its portfolio.

Generally, an SIP carries an end date after 1 Year, 3 Years or 5 years of investment. The investor can hence withdraw the amount invested whenever he wishes or as per his financial goals.

With top-up or step-up SIPs, you can increase your monthly SIP instalments by a fixed percentage (e.g. 10%, 15% etc.) or fixed amount (Rs 1000, 2000 etc.) at certain intervals. Increasing your SIP instalments over time can generate substantially higher returns in the long run.

The main difference between SIP and lump sum mutual fund is the cash flows. One invests only once in a lump sum investment and in SIP he/she invests regularly. There is no rule that a person investing through SIP can't do a lump sum when there are surplus funds available.

If you are an investor with a small but regular amount of money available for investment, SIPs can be a more suitable investment option. For investors with a relatively high investment amount and risk tolerance, lump-sum investments may be more beneficial.

Why SIP is better than LIC? ›

In the case of a lump sum investment, there is a substantial risk of losing money if the market declines. But with SIP investment, the money is invested across the market ups and downs and hence is quiet safer than lump sum investment.

Risk 1: The risk of SIP getting a negative return or price risk. Risk 2: The risk being able to get your money back quickly or liquidity risk. Risk 3: The risk of downgrade of a security or credit risk. Risk 4: The risk of the company not paying the owners of the bond their due or default risk.

Link your SIP to some goals

List your goals in the order of priority, fix a period to achieve the same, and finally measure each goal in terms of the funds required. By doing this, you can make your SIP investments correspond to each goal, depending on the timelines and the risks involved.