Which one is better? Daily SIP or Monthly SIP?

If you are an investor, you already know about Systematic Investment Plans (SIPs). Over the last years, SIPs have become the first option for investing in Mutual Funds, especially equity funds. 

With SIPs, you can earn more money with small investments. But when it comes to frequency, many investors wonder whether a daily SIP in mutual funds is better than a monthly SIP?

So, let's find out what works best for you.

What is a Daily SIP?

A daily SIP investment involves contributing small amounts towards your chosen mutual fund scheme every trading day of the month. For example, if you aim to invest Rs. 3,000 monthly, you will invest approximately Rs. 100 daily. This approach helps you invest at different prices throughout the month.

Daily SIPs use automated systems to deduct a set amount from your bank account each trading day, ensuring regular investments without the need for manual approval.

What is a Monthly SIP?

A monthly SIP means investing a fixed amount once every month on a specific date. For example, if you choose to invest Rs. 5,000 monthly, the entire amount gets deducted from your account on your selected date.

Monthly SIPs have been the first choice for most investors because of its simplicity and alignment with salary cycles. This approach requires ensuring fund availability just once a month, making it easier to manage cash flow.

What are the Differences Between Daily SIP and Monthly SIP?

Before comparing daily SIP vs monthly SIP, consider these important factors:

1. Your income pattern plays an important role in deciding the right SIP frequency. 

2. Your choice should be influenced by expectations of market volatility.

3. It's easier to maintain consistent investment habits with simple administration.

Benefits of Daily SIPs and Monthly SIPs

Below are some of the advantages of daily SIPs and monthly SIPs.

Daily SIPs

- Reduces the risk of investing all your money when markets are high.

- Will help you create a stronger investment habit.

- Works better during ups and downs in the market as you catch more price points

Monthly SIPs

- Easier to manage as you only need to check for sufficient funds once a month

- Aligns perfectly with monthly salary cycles for most working professionals

- Requires less tracking and monitoring of multiple transactions

To End

Both daily and monthly SIP approaches have their advantages depending on your financial situation, income pattern, and investment objectives. The key to successful investing lies not only on frequency but in the consistency of your investments. No matter which option you choose, staying invested for the long term is important.

For guidance on SIP investments and access to top-performing mutual funds, visit the Tata Capital Moneyfy website or download our app.