What Is the Best Date for SIPs (Systematic Investment Plans)?

3 mins read
by Angel One
Systematic Investment Plans (SIPs) can help accumulate wealth with smaller fund contributions. However, which date can the investor choose to maximise their gains? Read to find out.

Systematic Investment Plans (SIPs) in mutual funds allow investors to invest smaller amounts in contrast to a lump sum.

The dilemma arises when an investor has to decide the date of allocation which can maximise the capital gains. Once, the date is chosen, it is important to refrain from any tampering with the investments. The key to stable returns from SIPs is maintaining financial discipline and nonreaction to market fluctuations.

Pick The Best Date

Generally, the concept of correctly timing your investment holds true for yielding optimal results. Whether it be choosing the moment to buy or sell stocks, or planning the moment to enter the real estate market, time is considered an important factor.

However, this is put to the test when it comes to SIPs. A Systematic Investment Plans (SIP) is known for being a simple and effective method of wealth accumulation. As SIP regularly invests funds in small parts spread across a vast period, it can harness the power of compounding without being highly affected by time.

Which Is the Best Date for SIP?

To explore the potential impact of different monthly investment dates on SIP returns, a decade-long study from February 1, 2013, to February 1, 2023, was conducted. The analysis took into account dates from the 1st to the 28th of each month, utilising Aditya Birla Sun Life Frontline Equity Fund as a representative large-cap scheme, alongside the Nifty 100-TRI, commonly used as a benchmark.

Here is the adapted table displaying the rephrased returns:

SIP Investment Date Fund XIRR Returns (%) Index XIRR Returns (%)
1 12.09 12.79
2 12.09 12.79
3 12.11 12.81
4 12.11 12.80
5 12.09 12.79
6 12.11 12.81
7 12.10 12.81
8 12.09 12.80
9 12.07 12.78
10 12.08 12.79
11 12.11 12.81
12 12.13 12.83
13 12.11 12.82
14 12.12 12.82
15 12.12 12.82
16 12.12 12.82
17 12.10 12.80
18 12.08 12.79
19 12.09 12.80
20 12.10 12.80
21 12.15 12.86
22 12.17 12.87
23 12.16 12.86
24 12.19 12.89
25 12.18 12.88
26 12.16 12.87
27 12.15 12.86
28 12.19 12.89

This examination concluded that the specific date of the month for making SIP investments does not significantly influence the returns. For the selected equity fund, returns fluctuated slightly between 12.07% and 12.19%. Meanwhile, the benchmark index showcased a return range of 12.78% to 12.89%. The accumulated value of an investment of ₹10,000 monthly in the fund was between ₹22.4 lakh to ₹22.62 lakh. In comparison, the benchmark index yielded between ₹23.25 lakh to ₹23.48 lakh.

To understand why this happens, let’s understand the landscape in which SIP operates.

Understanding The SIP Landscape

An SIP thrives on the principles of discipline and consistency. As these investments are spread across various market cycles, the SIPs mitigate the risk of market volatility and capitalise on rupee cost averaging.

Moreover, different investing dates have a negligible impact on the returns. SIPs are affected more by factors such as market condition, fund selection, asset allocation, duration of the investment, etc. To make the most of their investment opportunities, investors can analyse the mutual funds thoroughly to make informed decisions.

In conclusion

After taking into consideration the foretold key points, the concept of choosing the “best date”  can be futile. The SIP returns have proven to remain uniform, irrespective of the chosen date of the month.

Dispelling the notion of the best date, SIP investors can focus on factors within their control consistency, financial discipline, patience during market fluctuations, and other general investment guidelines. To know more about stock markets, stay connected with the Angel One blog. Start your SIP with Angel One, and choose any date of the month convenient for you. Open your Demat account now!

Dreaming of financial freedom? Use our Online SIP Calculator to see how regular investments can add up to grow wealth. Take the first step towards your goals. Calculate now!

Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.