What is the optimum frequency of installments for investing through the systematic investment plan? Should I invest monthly, quarterly or half-yearly?
07-Sep-2006 •Research Desk
I plan to start investing in mutual funds through the SIP route, but am not able to decide what should be the optimum frequency of installments. Should I invest monthly, quarterly or half-yearly?-Aman Chhabra
More than anything else, the optimum frequency of an SIP should be a function of your convenience. You should first ascertain how frequently you can set aside funds for investment without pushing your finances to the edge. While there is no doubt that SIP is the best way to invest in equity funds, but there is no sound basis of saying that a particular frequency of investment is the most profitable. If you can invest comfortably every month, why not go for the monthly option? In this case, the concept of rupee cost averaging may also work better for you.
Moreover, whether you invest monthly or quarterly will not affect the performance of your portfolio as much as your discipline over the long term. Therefore, focus upon investing in good, established funds over the long-term, and don't get carried away by the market euphoria or any tall claims. Invest through the SIP, but choose the frequency that is more convenient to you.