If the amount invested every month is not same or is not invested exactly on the same date, then does it have the advantage of SIP? When redeeming such investments; the long term capital gain considers the period of one year for the complete amount from the date of first investment or each individual SIP?
- SK Anaokar
Investing through SIPs is a disciplined approach to regular investing. You should base the frequency of your SIP contributions on your convenience and cash flows. For instance, there is nothing to prove that a daily SIP is better than a monthly or otherwise. Irregular sums of investments, invested regularly still manages to average out the investment over the long-term and over a 5- or 10-year investment cycle will not have a marked difference in returns. Focus on investing in good, established funds that have a performance track record over the long-term, and don't get carried away by the market euphoria or any tall claims. When redeeming SIP investments, the holding period of units is taken into consideration for long-term capital gains calculation.
This article was originally published on March 09, 2011.
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