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In today's world, where we are spoiled for choice in almost everything, investors enjoy similar luxury when it comes to SIP investing. You can now do an SIP every month, every fortnight, every week and, in some cases, every day .
So, which is the best form of SIP?
Our data suggests that daily SIP can grow your money the fastest based on five-year rolling returns between September 2, 2019 and August 20, 2024. On average, they offer a 0.59 per cent higher annualised return than monthly SIP.
Daily SIP outperforms other frequencies
| SIP Frequency | Five-year rolling returns(%) |
|---|---|
| Daily | 15.315 |
| Weekly | 14.728 |
| Fortnightly | 14.735 |
| Monthly | 14.725 |
| Note: SIP done for BSE Sensex TRI | |
So, should you go for daily SIP to maximise your returns? Here are a couple of things to keep in mind:
-
Complexity in capital gains calculation:
With daily SIPs, each daily instalment is created as a separate investment, which can complicate the calculation of capital gains when you withdraw your investment.
- Daily fund availability and psychological impact: Daily SIPs require consistent fund availability in your bank account. Also, the continuous daily debits can be taxing, as they demand constant vigilance to avoid missed payments.
Our take
While the slightly higher returns from a daily SIP may seem appealing, the added complexity, administrative burden and psychological stress may outweigh its performance advantage.
Which is why monthly SIPs still make more sense. They align with your income and recurring monthly expenses (food, electricity, rent, etc.). Additionally, the idea of SIPs is to simplify mutual fund investments, not complicate them as daily SIPs might.
Also read: What are smart SIPs?
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