Daily SIP vs Monthly SIP

SIP stands for Systematic Investment Plan. It's a method of investing money regularly over a period of time. In an SIP, an investor invests a fixed amount of money at regular intervals, such as daily, monthly or quarterly, into a selected fund scheme. The idea behind SIPs is to encourage disciplined and regular investing, regardless of market conditions. But a question arises: How often should you invest through SIPs? Should it be daily or monthly? This article will help you choose which is the best for you.

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SIP Insurance Plan Benefits
Start SIP with as low as ₹1000
Start SIP with as low as ₹1000
No hidden charges
No hidden charges
Save upto ₹46,800 in Tax
Save upto ₹46,800 in Taxunder section 80C^
Zero LTCG Tax
Zero LTCG Tax
Disciplined & worry-free investing
Disciplined & worry-free investing

  • Insurance Companies
  • Mutual Funds
Returns
Fund Name 3 Years 5 Years 10 Years
Virtue II PNB Metlife 18.68% 25.83%
16.48%
View Plan
Pure Equity Birla Sun Life 17.56% 21.84%
15.07%
View Plan
Large Cap Equity Fund Tata AIA 18.45% 21.82%
14.88%
View Plan
Grow Money Plus Fund Bharti AXA 14.74% 18.58%
14.12%
View Plan
Pure Stock Fund Bajaj Allianz 17.34% 20.53%
14.04%
View Plan
Diversified Equity Fund HDFC Standard 14.77% 17.79%
13.96%
View Plan
Growth Super Fund Max Life 15.5% 17.5%
12.83%
View Plan
Equity Fund SBI 14.88% 16.53%
12.1%
View Plan
Bluechip Fund ICICI Prudential 13.23% 15.89%
11.33%
View Plan
Growth Plus Fund Canara HSBC Oriental Bank 12.92% 13.89%
10.36%
View Plan

Updated as of Nov 2024

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  Returns
Fund Name 3 Years 5 Years 10 Years
Active Fund QUANT 24.92% 31.48%
21.87%
Flexi Cap Fund PARAG PARIKH 20.69% 26.41%
19.28%
Large and Mid-Cap Fund EDELWEISS 22.34% 24.29%
17.94%
Equity Opportunities Fund KOTAK 24.64% 25.01%
19.45%
Large and Midcap Fund MIRAE ASSET 19.74% 24.32%
22.50%
Flexi Cap Fund PGIM INDIA 14.75% 23.39%
-
Flexi Cap Fund DSP 18.41% 22.33%
16.91%
Emerging Equities Fund CANARA ROBECO 20.05% 21.80%
15.92%
Focused fund SUNDARAM 18.27% 18.22%
16.55%

Updated as of Nov 2024

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How Does Daily SIP Work?

A daily SIP involves investing a small amount into your chosen fund scheme daily. This approach aims to leverage the power of rupee-cost averaging to a greater extent. Rupee-cost Averaging essentially evens out the purchase price of units by investing fixed amounts irrespective of market fluctuations. You can calculate your returns on SIP investments using the SIP calculator. An SIP calculator is a tool used to estimate the potential returns on investments made through SIPs in mutual funds or any other fund schemes. It considers factors such as the invested amount, investment duration, expected rate of return, and frequency of investments to calculate the corpus that can be accumulated over time. Users can use this calculator to plan their investment growth and set realistic financial goals.

SIP Calculator

I want to invest Pro Tip
Financial experts suggest that a person should invest 10-15% of their monthly income for long-term financial growth
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I want to invest for Pro Tip
Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively
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Expected return Pro Tip
Top 25% of investors consistently generate more than 12% return
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Total Wealth ₹22.4 L
View Plans
I want to save
I want to invest for Pro Tip
Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively
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Expected return Pro Tip
Top 25% of investors consistently generate more than 12% return
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Monthly Investment ₹22.4 L
View Plans
Top Funds with High Returns (Past 7 Years)
High Growth Fund
19.3%
High Growth Fund
Accelerator Mid-Cap Fund II
15.61%
Accelerator Mid-Cap Fund II
Opportunities Fund
15.48%
Opportunities Fund
  1. Advantages of Daily SIP Plan

    • Enhanced Rupee-Cost Averaging: Daily SIP purchases produce a more precise cost-averaging effect than monthly SIPs. By investing small amounts throughout the month, you capture market movements more frequently, potentially acquiring units at a lower average cost over time.

    • Potential for Higher Returns: Daily SIPs could lead to higher returns in a changing market due to more frequent purchases at potentially lower NAVs (Net Asset Values).

  2. Disadvantages of Daily SIP Plan

    • Increased Transaction Costs: Some fund houses might levy transaction charges for every SIP instalment. Frequent purchases through daily SIP can accumulate these charges, potentially lowering your returns.

    • Difficult to Track and Manage: Monitoring daily investments can be difficult. Keeping track of multiple transactions and managing investment statements can become overwhelming.

    • Limited Availability: Not all fund houses or investment platforms offer daily SIP options. The availability of this feature might be restricted.

Monthly SIP Meaning

Monthly SIP is a simple and disciplined investment approach where you invest a fixed amount of money in a mutual fund or market-linked investment scheme at regular intervals, i.e. monthly. Monthly SIP strategy is used to accumulate wealth over time, especially for long-term financial goals like retirement or buying a house.

start-an-sip-today-watch-your-money-grow start-an-sip-today-watch-your-money-grow

How Does Monthly SIP Work?

Monthly SIPs are the most popular choice for investors. They involve investing a fixed amount into your chosen fund scheme on a predetermined date every month.

  1. Advantages of Monthly SIPs

    • Convenience and Simplicity: Aligns perfectly with your monthly income cycle, making budgeting and managing finances easier. Tracking monthly transactions is less time-consuming.

    • Reduced Transaction Costs: Compared to daily SIPs, monthly SIPs typically incur fewer transaction charges, maximizing your returns.

    • Discipline and Consistency: The monthly rhythm encourages a disciplined investment habit, fostering long-term wealth creation.

    • Reduced Emotional Influence: Less frequent exposure to market movements can help minimize emotional reactions and impulsive decisions.

  2. Disadvantages of Monthly SIPs

    • Less Frequent Cost Averaging: Compared to daily SIPs, monthly purchases capture market movements less frequently, potentially leading to a slightly higher average cost per unit.

    • Missed Opportunities: In a persistently rising market, monthly SIPs might miss out on some opportunities to buy units at lower NAVs compared to daily purchases.

Choosing the Right SIP Frequency

There's no one-size-fits-all answer to the daily vs. monthly SIP debate. The ideal choice depends on your individual choices and financial goals:

  • Investment Horizon: Long-term investors (10+ years) might benefit more from the discipline and consistency of monthly SIPs. The impact of cost averaging becomes less significant over longer periods.

  • Financial Discipline: If you struggle with managing finances or tracking investments, monthly SIPs offer a simpler and more manageable approach.

  • Risk Tolerance: Daily market fluctuations might be unsettling for risk-averse investors. Monthly SIPs can help reduce emotional decision-making.

  • Investment Amount: If you're investing smaller amounts, the potential benefit of daily cost averaging might be negligible. Transaction costs associated with daily SIPs might outweigh the advantages.

Here are some additional factors to consider:

  • Income Cycle: Align your SIP frequency with your income cycle for easier budgeting and maintaining consistency.

  • Investment Platform: Choose a platform that offers the SIP frequency that best suits your needs. Some platforms might have minimum investment requirements for daily SIPs.

start-small-&-build-your-wealth-for-a-brighter-tomorrow start-small-&-build-your-wealth-for-a-brighter-tomorrow

FAQs

  • Are there any tax benefits associated with daily vs. monthly SIPs?

    No, the tax treatment of SIP investments remains the same irrespective of the chosen frequency (daily or monthly).  Equity SIPs qualify for Long-Term Capital Gains tax (LTCG) benefits if held for over one year, while debt SIPs are taxed based on the holding period as per income tax slabs.
  • Are daily SIPs riskier?

    Not necessarily. Both daily and monthly SIPs are designed to mitigate risk through rupee-cost averaging.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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