Which Is The Best SIP Date For Mutual Fund Investments?

Which Is The Best SIP Date For Mutual Fund Investments?

Investing in Mutual Funds has become so convenient that nowadays we can invest on any day that we like. However, this has also resulted in confusion when it comes to choosing a suitable date for their investment. Today in this post we will try and decode which day is the Best SIP date for mutual fund Investments.

Few try to choose the SIP based on their salary credit and few look for the last Thursday of the month when the volatility is high due to F&O expiry.

Few may also choose the SIP date based on their own research. In this article, we will first understand what SIP is and what are its advantages and then move on to the best SIP date for mutual fund investments. 

What is SIP?

A Systematic Investment Plan (SIP), more popularly known as SIP, is a facility offered by mutual funds to investors to invest in a disciplined manner.

SIP facility allows an investor to invest a fixed amount of money at pre-defined intervals in the selected mutual fund scheme. The fixed amount of money can be as low as Rs. 500, while the pre-defined SIP intervals can be on a weekly/monthly/quarterly/semi-annually, or annual basis.

By taking the SIP route to investments, the investor invests in a time-bound manner without worrying about the market dynamics and stands to benefit in the long term due to average costing and the power of compounding.

Best SIP Date For Mutual Fund Investments

Date Rate(%)Values
1st of a month19,30331698
5th of a month19,36332901
10th of a month19,82340950
15th of a month19,52335719
20th of a month18,77322362
25th of a month18,42316287

(SOURCE: MONEYCONTROL)

In the table above, we have taken HDFC Top 200 as a sample fund. Assume one has been investing Rs 1000 per month for a period of 10 years (120months) from 2003 to 2013 on different dates 1, 5, 10, 15, 20, and 25.

Best SIP Date For Mutual Fund

In the table above, some more examples with other funds have been given for the same period between 2003 to 2013. 

SIP on the 5th, 7th and10th of every month works best compared to other dates but the difference is marginal and in fact negligible. 

So Which Date Should You Choose?

Looking at all dates above it is safe to say that there is no particular date. In addition, the dates above could be ranked purely due to chance. We can conclude that your SIP date does not matter. What matters is your consistency in investing and holding for the long term.

The “Best SIP Date for Mutual Fund Investment” according to me is the date when you receive your income. First, invest and with the rest of the amount spend without any guilt.

Advantages Of Investing In SIP

Here are some of the top advantages of investing which will also help get better insights into the right date for your SIP.

1. Rupee Cost Averaging

The unique feature of SIP is the Rupee Cost Averaging, where you buy more units when the market is low and buy less when the market is high. The main aspect here is being consistent no matter what the market condition. What happens here is by doing so your investment gets averaged out to provide 

2. Simplicity Of Choice

With SIP, you can start investing small amounts as small as Rs 500 each month, and watch it grow. A SIP is not only simple and convenient to track, but also makes you save more.

3. Flexibility

SIP provides you with tremendous flexibility. Long-term commitments like investing in instruments like Public Provident Fund or Unit Linked Insurance Plans can be avoided with SIP.

These are open-ended funds to be withdrawn as per your choice, meaning they do not have a fixed tenor. You can either withdraw the full or a partial amount from your investment, without incurring any losses.

The amount of investment is also flexible: it can be increased or decreased. Just remember to have a long investment horizon for wealth creation.

4. Higher Returns

Compared to traditional fixed or recurring deposits, SIP provides double the returns. This can help you beat the inflated costs.

5. Power Of Compounding

SIP operates on the principle of receiving compound interest on your investments. In other words, a small amount invested for a long time fetches better returns than a one-time investment.

6. Acts As An Emergency Fund

Being an open-ended fund without any tenor, you can withdraw your SIP Investment as a contingent fund.

Also Read: The Power Of SIP In Investing – How an SIP works?

In Closing

A SIP scores when it comes to simplicity. Setting a single date for your SIP reduces the hassle for you, and set it close to your payday makes it easier to ensure that your investing happens before any spending does.

Whether you select multiple dates or a single date, make sure you continue SIP. Don’t lose sight of the biggest SIP benefit, which is that you’re investing.

This is more important than how frequently you set the SIP or at what date of the month you are investing. That’s all for the article Which Is The Best SIP Date For Mutual Fund Investments?, We hope you enjoyed reading it. Happy Investing!

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