Should We Invest Daily in SIP Mutual Funds?

Investing daily in SIP mutual funds^^ can help you build wealth steadily over time. However, most SIPs operate monthly, which is more practical and equally effective for most investors. Choose a frequency that aligns with your financial discipline and goals. Consistency is what makes compounding work best. In this article, let us explore more if we should invest daily in a SIP mutual fund.

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Save upto ₹46,800 in Taxunder section 80C^{^}

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Mutual Funds

Fund Name	5 Years	7 Years	10 Years
	Returns
Virtue II PNB Metlife Rating	25.83%	18.88%	16.48% View Plan
Pure Equity Birla Sun Life Rating	21.84%	15.69%	15.07% View Plan
Large Cap Equity Fund Tata AIA Rating	21.82%	18.36%	14.88% View Plan
Grow Money Plus Fund Bharti AXA Rating	18.58%	15.45%	14.12% View Plan
Pure Stock Fund Bajaj Allianz Rating	20.53%	14.93%	14.04% View Plan
Diversified Equity Fund HDFC Standard Rating	17.79%	14.69%	13.96% View Plan
Growth Super Fund Max Life Rating	17.5%	14.79%	12.83% View Plan
Equity Fund SBI Rating	16.53%	13.69%	12.1% View Plan
Bluechip Fund ICICI Prudential Rating	15.89%	12.84%	11.33% View Plan
Growth Plus Fund Canara HSBC Oriental Bank Rating	13.89%	10.89%	10.36% View Plan

Updated as of Jan 2025

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Fund Name	3 Years	5 Years	10 Years
	Returns
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 Dec 2024

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What is a Daily SIP in a Mutual Fund?

A daily SIP is a Systematic Investment Plan (SIP) that lets you invest a small, fixed amount in mutual funds every day. Unlike monthly or weekly SIPs, it spreads your investments evenly across all trading days. The minimum investment amount of daily SIPs is usually lower, making it easier to start.

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Monthly SIP Yearly SIP Lumpsum

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

/Month

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

Years

Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

% Annually

Total Wealth ₹22.4 L

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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

Years

Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

% Annually

Monthly Investment ₹22.4 L

View Plans

Top Funds with High Returns (Past 7 Years)

19.3%

High Growth Fund

15.61%

Accelerator Mid-Cap Fund II

15.48%

Opportunities Fund

Features of Daily SIP in Mutual Funds

Instead of investing on a monthly basis, you can invest in a best SIP plan on a weekly basis or daily basis. Let us learn some of the key features of a daily SIP in mutual fund:

Frequent Investments: Allows small, daily investments in mutual funds instead of monthly or weekly contributions.
Lower Investment Amount: Starts with smaller amounts, making it affordable for beginners.
Disciplined Approach: Encourages consistent investing habits every day.
Rupee Cost Averaging: Daily investments average out purchase costs, benefiting from market ups and downs.
Reduces Market Timing Risk: Spreads investments over multiple days, reducing the impact of market volatility.
Ideal for Irregular Income: Suitable for individuals with daily or irregular cash flows.
Compounding Benefits: Daily contributions maximize compounding over time.
Convenience: Easily set up through online platforms or fund houses.
Maturity Calculation: You can benefit from a SIP calculator to estimate the maturity amount from your daily SIP investments.

Types of SIP Based on Frequency

There are different types of SIP based on the investment frequency, which are as follows:

Daily SIP: You invest a small amount every day. Best for people with daily income.
Weekly SIP: You invest once a week. Useful for handling short-term market changes.
Monthly SIP: You invest once a month. Popular among salaried people.
Quarterly SIP: You invest every three months. Good for those with income at intervals.
Yearly SIP: Invests once a year. Works for people with annual income or bonuses.

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

Should We Invest Daily in SIP Mutual Funds?

Investing through a Daily SIP in mutual funds is gaining popularity, especially among those with irregular or frequent incomes. For Example, Riya, a freelance graphic designer, earns daily payments. A daily SIP allows her to invest ₹100/day without straining her budget.

Riya should consider the following aspects to decide if she should invest daily in a SIP mutual fund:

Aspect	Daily SIP	Other SIPs/Investments
Amount Flexibility	Invest as little as ₹100/day.	Usually fixed monthly or lump sum.
Convenience	Can be automated with daily reminders.	Monthly SIP is easier to manage on specific dates.
Frequency of Market Exposure	More frequent exposure to market fluctuations.	Less frequent market exposure (monthly or lump sum).
Returns	Similar returns as monthly SIPs due to rupee cost averaging but spread over more frequent intervals.	Monthly SIP or lump sum may yield higher returns if invested strategically during market dips.
Cash Flow Requirement	Suitable for daily or irregular income earners.	Better for people with stable monthly income.
Investment Strategy	Helps build discipline with daily contributions.	Easier to track with monthly contributions.
Impact on Financial Goals	Slow, steady accumulation over time.	Can reach financial goals faster with larger monthly or lump sum investments.
Cost of Investment	Lower transaction costs due to smaller amounts.	Higher costs per transaction (monthly or lump sum).

Benefits of Daily SIPs

A daily SIP in a mutual fund offers several benefits to investors. Let us learn about some of them below:

Risk Reduction: By investing daily, you avoid the risk of investing large sums during market highs.
Enhanced Rupee Cost Averaging: Daily investments can reduce the average cost per unit more effectively than monthly contributions due to the frequency of purchases.
Discipline: Encourages consistent habits and long-term wealth creation.
Compounding Effect: Regular investments grow exponentially over time.
Better Exposure to Market Fluctuations: Daily SIPs allow investors to capitalize on market dips more frequently.
Flexibility: Suitable for varying income patterns like freelancers or small business owners.

Drawbacks of Daily SIP in Mutual Funds

The major disadvantages of a Daily SIP in a mutual fund are as follows:

Lower Flexibility: Requires strict daily commitment, which might not suit everyone’s financial habits.
Minimal Impact with Small Amounts: Very small daily investments may take longer to show significant growth.
Limited Availability: Not all mutual fund schemes offer the daily SIP option.
Excessive Monitoring: Frequent investments might tempt investors to monitor markets unnecessarily, leading to emotional decisions.
Investment Planning – The investment can be planned better on a monthly basis. You can assess your income and expenses better on a monthly basis. Hence, you can implement the best investment strategy with a monthly income plan.

Which is Better: Daily SIP, Monthly SIP, or Lump Sum Investment

Type	Key Features	When to Choose
Daily SIP	- Small investments are made daily. - Offers smoother market averaging. - Low impact of market volatility.	- Suitable for highly volatile markets. - Ideal if you have regular daily income (e.g., freelancers).
Monthly SIP	- Fixed amount is invested monthly. - Convenient and easy to manage. - Popular among salaried individuals.	- Best for stable, disciplined investing. - Suitable for regular monthly income earners.
Lump Sum Investment	- One-time large investment. - High risk during market peaks. - Potential for higher returns if timed well.	- Ideal for experienced investors. - Best during market corrections or for long-term goals.

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

Tools to Calculate Daily SIP Returns in Mutual Funds

Following are the key online calculators to estimate the returns for Daily SIP in Mutual Funds:

SIP Calculator: Estimates the returns on your SIP investment over time, based on your monthly contributions and the expected rate of return.
XIRR Calculator: Helps calculate the annualized return on your SIP, considering the irregular investment dates and varying amounts.
CAGR Calculator: Determines the compound annual growth rate, giving the consistent growth rate of your investment over a specific period.

Conclusion

Investing daily in SIP mutual funds can be a smart approach for consistent wealth growth. It allows you to take advantage of rupee cost averaging, minimizing the impact of market volatility. However, it's important to assess your financial goals and risk tolerance before committing. If you’re looking for long-term growth with manageable risk, daily SIPs can be a good option. Always ensure your investment aligns with your overall financial plan.

FAQs

What is a Daily SIP?

A Daily SIP allows you to invest small amounts in mutual funds every day, unlike the usual monthly or weekly SIPs.
Can I invest daily in SIP mutual funds?

Yes, many mutual funds allow daily SIPs for small, regular investments.
What are the benefits of daily SIPs?

Daily SIPs help reduce market volatility and average the cost of investment better than monthly SIPs.
Is daily SIP better than monthly SIP?

Daily SIPs may provide better cost averaging, but monthly SIPs are more practical for most investors.
Do daily SIPs earn better returns than monthly SIPs?

There is no significant difference in long-term returns between daily and monthly SIPs.
Who should invest in daily SIPs?

Daily SIPs are suitable for investors with a regular daily income, like freelancers or gig workers.