Out of a weekly and monthly SIP, which is better?

Between a weekly and a monthly SIP, which do you think is better?
- Amar Shahani

I don't have or have not come across any empirical study comparing the two. But I'm pretty sure if there was one, the results would be fairly random, and there would be a high degree of randomness, depending on the period you choose or even the different schemes you run such a study on.

So I'd say, why overcomplicate things by going for a weekly SIP. It would have four times more transactions, and you would have a much longer transaction statement to deal with. Even from a capital gains tax perspective, there would be many more transactions at different NAVs. It complicates your capital gain tax computation a little when you redeem these investments. Now you could argue this is handled digitally. But I'd still say why to overcomplicate when you derive no tangible benefit by making more frequent transactions of smaller amounts.

On the contrary, we prefer to recommend monthly SIPs because it fits well with the cash flow cycles of the investors. You earn monthly, and that's why you should save and invest monthly. For that reason, I'd suggest you stick to the good old monthly SIPs.

This article was originally published on February 24, 2022.