We know that monthly SIPs are the norm. But can you get better returns by doing your SIPs weekly or even daily. Here’s the answer.
If you are a mutual fund investor, you would already know about SIPs. Chances are you are doing them yourself. Over the last few years, SIPs have become the go-to option for investing in mutual funds, especially equity funds. The benefits are clear. With SIPs, you can build a large corpus with small investments. You also get to average your investment cost (an aspect called rupee cost averaging). Last but not least, you become disciplined with investing. When SIPs are also increased every year by a certain percentage, magic happens. You can make use of certain tools like SIP Return Calculators to help calculate your estimated returns on investment
A normal question that arises is if SIPs are so good, why not do more of them? The more, the merrier, isn’t it? What if you opted for weekly or even daily SIPs? Will you get better returns due to better averaging?
To find out, we looked at the returns from daily, weekly and monthly SIPs done in the NIFTY 50 TRI, NIFTY Midcap 150 TRI, and NIFTY Smallcap 250 TRI over the last 10 years. The results are summarised in the table below.
| Returns of Daily vs Weekly vs Monthly SIP | |||
| Scheme | Daily SIP | Weekly SIP | Monthly SIP |
| NIFTY 50 TRI | 12.44 | 12.45 | 12.44 |
| NIFTY Midcap 150 TRI | 16.35 | 16.36 | 16.32 |
| NIFTY Small Cap 250 TRI | 13.31 | 13.32 | 13.29 |
SIP done from April 1, 2013 to April 1, 2023
All Figures in %
As seen in the table, increasing the frequency of your SIPs didn’t have a material impact on the returns. In other words, a monthly SIP is enough to provide you the benefits of cost averaging.
Wait…There’s More!
Further, doing daily or weekly SIPs has its own complications. Most platforms allow you to do monthly SIPs, not daily or weekly. That means if you want to opt for the daily or weekly ones, the onus is on you to carry them out. That means remembering to do it and then finding the time to do it – every week or (gulp!) every day.
Secondly, your recordkeeping responsibilities will go up. With monthly SIPs, you will have 12 entries per year per fund if you only buy. With weekly SIPs, you will have 52 entries per year per fund. With daily SIPs…well, you got the point.
Third, taxation becomes tricky when you do daily or weekly SIPs. Each SIP is a fresh investment and has to be accounted for separately. So, daily/weekly SIPs can multiply your workload significantly, without compensating you appropriately. Of course, the fund house may provide you with a ready statement but would you be happy to receive multiple PDFs of multiple pages?
Which Is better: Daily, Weekly, or Monthly SIP?
SIPs have become synonymous with monthly investments. There is a reason for that. As you saw, investing once a month gets you all the goodies. Plus, most people have a monthly income cycle, so monthly SIPs perfectly gel with that frequency. So, by all means, you can go for monthly SIPs, as the above data shows that daily or weekly SIPs don’t enhance your returns significantly. Further, if you want to know which date of the month is best for your SIPs, then you can check our analysis on the same too.
How can you enhance your returns then if daily/weekly SIPs are not the way out? One definite way to increase the returns from your investments is to invest in a disciplined manner and avoid some of the common SIP mistakes that investors make.
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