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The popularity of SIP (Systematic Investment Plan) in mutual funds is on the rise, but a common debate persists: Which SIP frequency—daily, weekly, or monthly—yields better returns? This blog dives deep into the data across 10, 15, and 20 years for small-c

The popularity of SIP (Systematic Investment Plan) in mutual funds is on the rise, but a common debate persists: Which SIP frequency—daily, weekly, or monthly—yields better returns? This blog dives deep into the data across 10, 15, and 20 years for small-cap, mid-cap, and large-cap indices to uncover the truth.

 

Understanding SIP 

A SIP allows you to invest a fixed amount regularly in a mutual fund scheme, taking advantage of compounding and rupee cost averaging. It's a favored method because it aligns with most people's monthly salary cycles.

 

The Common Misconception  

Many believe that weekly SIPs generate higher returns than monthly ones. However, our analysis of Nifty 50, Nifty Midcap 150, and Nifty Smallcap 250 reveals that the difference in returns between daily, weekly, and monthly SIPs is negligible. For example, Nifty 50 showed nearly identical returns over 10 to 20 years, regardless of SIP frequency.

 

Mid-Cap and Small-Cap Indices  

Even in more volatile indices like Nifty Midcap 150 and Nifty Smallcap 250, the difference in returns across different SIP frequencies is minimal.

 

Different Equity Plans

This pattern holds true across various mutual fund categories, reinforcing that SIP frequency has little impact on returns.

 

Who Should Opt for Daily SIPs?

While returns may not differ significantly, your income cycle and financial habits might influence your choice. Daily SIPs might suit those with daily income, while monthly SIPs align well with salaried individuals.

 

Challenges with Daily and Weekly SIPs

Daily and weekly SIPs can be cumbersome to manage, requiring more record-keeping and complicating tax calculations.

 

The Best Approach to Higher Returns

Better returns stem from smart investment strategies, not SIP frequency. Consider investing more when the market dips to lower your average cost and maximize long-term gains.

 

Conclusion

The frequency of your SIP—daily, weekly, or monthly—has little impact on returns. Choose based on your income cycle and convenience, but remember that smart strategies, not frequency, lead to better returns.