New Delhi: While SIP (systematic investment plan) has captured the imagination of the common investors, most of them still think in terms of monthly SIPs. However, advisors are gradually considering daily SIPs simply because they touch far more price points in a month compared to a monthly SIP.
The monthly SIP has become almost a default mode, thanks to the millions of salaried class people – who receive salaries once a month – who have opted for it.
Rupee cost averaging better served
“Many are thinking anew. In case of a monthly SIP, only a single day is chosen from a standard 22 trading days in a month. While daily SIPs allow the investor to hit the market 264 times in a year, it comes down to only 12 days a year in case of the monthly mode,” said Nilanjan Dey, director, Wishlist Capital.
“The rationale is easy to understand. The average price per unit stands a good chance to reduce. Rupee Cost Averaging, or RCA, is the reason why we do SIP in the first place. So multiple price points, that is multiple NAVs, are ideal for all unit holders. All 22 NAVs (in a month) will not be equally suitable (or unsuitable),” argued Dey, an advisor with more than two decades of advisory experience.
Paradigm shift in investing
“Daily SIPs harness the power of compounding by allowing investors to earn returns daily. This compounding effect can significantly enhance wealth accumulation over time,” Bajaj Finserv experts think.
Calling it a paradigm shift the financial services major says, “By investing daily, investors benefit from rupee cost averaging, which helps mitigate the impact of market volatility. This strategy ensures a more stable and consistent investment experience, regardless of market fluctuations.”
An SIP revolution is sweeping India. Recently published AMFI (Association of Mutual Funds in India) data show that in May a record amount of Rs 20,904.37 crore flowed into the markets through SIP. It was at Rs 20,371.47 crore just a month ago, compared to Rs 14,749 crore mopped up through this route in May 2023. Investment through SIP has been rising consistently in India.
Mutual funds are becoming a rage with SIP capturing the imagination of numerous investors. While monthly SIPs are a traditional favourite, voices are growing louder to examine the benefits of daily SIP. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
