Is there a ‘good’ date for a SIP?

Investing each month is a sure-fire way to make the most of market ups and downs in your equity funds. But given that there are 28 days on which you can make that investment, does investing on a particular day give better returns than others?

While at FundsIndia you can run a SIP up to the 28th, in most places and also with AMCs, SIPs (systematic investment plans) are allowed on specific days only – that is, your bank account will be debited and scheme units be allotted to you only on those days. The most common dates are on the 5th, 10th, 15th, and 25th of each month. Only a few allow an SIP even later.

So we picked a sample of equity funds from each category (large-cap, small-cap, and the multi-cap), as well as the main stock market indices. We then checked what the returns turned out to be on investments made on each of the four common days.

Slight differences

The result? Those of you who really want to milk the last drop of your investments can consider investing at the end of each month. Returns on investments made then are higher – if only by a mere whisker – compared to others. The end of the month works slightly better as derivative expiry on the last Thursday of each month usually makes the stock market at the time more volatile.

But if you aren’t very particular, there is no single ‘best’ day to run your SIP. Refer to the table alongside. Any day in the month will give you pretty much the same returns, with the difference in yield less than one percentage point. The yields in our sample funds list mirrored this trend too. Even over longer periods of seven or ten years, differences are slight. This is also borne out by the fact that investing each week doesn’t deliver much higher returns than monthly investments.

It is usually more convenient to set an SIP at the start of the month, as that is when your salary also normally flows in. It is often easy to get carried away or lose track of the balance in your account due to regular household expenses, bills, loan obligations, and so on.

Therefore, if you do choose to invest at the end of the month, ensure that you always have sufficient money to do so. Maintain a separate account for your investments to avoid a scenario of paucity of funds when your SIP is due.