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Is it better to do your SIP at the beginning of the month than the end of the month?

Stop worrying about the date of your SIP, instead be guided by the cycle of your cash flows, advises Ashutosh Gupta

Is it better to do your SIP at the beginning of the month than the end of the month? Also, in case of sudden market swings, should we invest more opportunistically by holding some money in liquid form?
- Madhu

Don't think too much about the date of your SIP investment. Over long periods of time, there could be a high degree of randomness in which date works out to be better for your SIP. So I would say, stop worrying about the date.

Instead, be guided by your own cycle of monthly cash flows. I would suggest, pick a date which is soon after your pay-cheque hits your bank account. So you start investing automatically before you start spending.

Coming to the second question about investing opportunistically, I would say, it is avoidable. As you rightly pointed out, the market moves happen suddenly and it is very difficult to pre-empt them and benefit from them. If you stay out of the market even on a handful of days when the market makes big moves, your returns can be substantially low. That again re-enforces the futility of trying to time the market and invest opportunistically. It will add a lot of activity and effort on your part but I believe the gains would not be substantial. So avoid doing that.

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