Systematic Investment Plans (SIPs) have emerged as a trusted way for investors to grow their wealth in a disciplined manner. With the rise of digital investing platforms and greater financial awareness, more individuals are exploring the best SIP frequency to suit their needs.
While most investors are familiar with monthly SIPs, daily SIPs are gaining attention, especially among those looking to maximise rupee cost averaging. But does investing more frequently actually yield better results?
In this blog, we will explore the differences between daily SIP and monthly SIP and understand which one is better for you.
What Is a SIP and How Does It Work?
A Systematic Investment Plan (SIP) is a method of investing a fixed sum in a mutual fund scheme at regular intervals. It eliminates the need to time the market and encourages consistent investing.
- Lump Sum vs SIP: Unlike lump sum investing, which requires a large one-time investment, SIPs allow for gradual and manageable contributions.
- Rupee Cost Averaging: SIPs take advantage of rupee cost averaging by purchasing more units when prices are low and fewer units when prices are high.
- Financial Discipline: SIPs instill a savings habit and align well with monthly income patterns.
SIPs are available in various frequencies: daily, weekly, monthly, and quarterly. While monthly SIPs are the most common, daily SIPs are becoming an option for more active or seasoned investors, and SIP experts often get questions about which one is superior.
What Is Daily SIP?
A daily SIP allows you to invest a fixed amount into mutual funds every business day the market is open. Over the course of a year, that adds up to approximately 250 contributions—each potentially made at a different NAV (Net Asset Value). This high-frequency investing strategy is designed to maximise the benefits of rupee cost averaging.
Benefits of Daily SIP:
- Frequent Cost Averaging: Since you invest every trading day, you get more opportunities to average out the cost of mutual fund units across varying NAVs. This can be especially beneficial in volatile markets.
- Better for Volatile Markets: Daily investments help capture more market fluctuations, offering a more refined averaging effect.
- Smaller Daily Commitments: Daily SIPs allow investors to start with very small amounts, making it easier to automate and stay consistent.
Disadvantages of Daily SIP:
While the benefits are attractive, daily SIPs come with their own set of challenges:
- Complex Recordkeeping: Managing hundreds of individual transactions can be taxing, particularly when it comes to filing taxes or tracking performance.
- Limited Fund Availability: Many mutual fund houses do not offer daily SIPs, limiting your choice of schemes.
- Higher Operational Overhead: The volume of transactions can result in increased effort for tracking, monitoring, and managing your investments.
In summary, daily SIPs are better suited for experienced or high-frequency investors who are comfortable with more active portfolio management.
What Is Monthly SIP?
A monthly SIP allows you to invest a predetermined amount into mutual funds once a month—usually on a date that aligns with your income cycle. This is the most popular option recommended by any seasoned SIP advisor or SIP expert, and for good reason.
Benefits of Monthly SIP:
- Easy to Align with Salaries: Since most people receive income monthly, monthly SIPs are easier to plan and integrate into a regular budget.
- Lower Transaction Load: Only 12 transactions per year means minimal paperwork, simpler tax filing, and easier portfolio monitoring—a point often emphasized by any good SIP consultant.
- Widely Available: Monthly SIPs are universally offered across mutual fund houses, including those offering SIP plans for NRIs, making them a convenient choice for all types of investors.
Disadvantages of Monthly SIP:
- Less Frequent Averaging: Compared to daily SIPs, monthly SIPs provide fewer opportunities to average out NAV fluctuations, which can be a limitation in highly volatile markets.
Still, for most investors—especially beginners and those who prefer a hands-off approach—monthly SIPs strike a balance between convenience, performance, and practicality.
Daily SIP vs Monthly SIP: Key Comparison Table
| Factor | Daily SIP | Monthly SIP |
| Investment Frequency | Every trading day (approx. 250/year) | Once a month (12/year) |
| Rupee Cost Averaging | Higher | Moderate |
| Transaction Volume | High | Low |
| Recordkeeping | Complex | Simple |
| Tax Management | Difficult | Easier |
| Fund Availability | Limited | Wide |
| Convenience | Low | High |
Real-World Example: Nifty Performance Comparison
To better understand how daily SIP vs monthly SIP stack up over the long term, let’s examine actual market data using two key indices:
Nifty 50 Index (2013–2023):
- Daily SIP CAGR: 12.44%
- Monthly SIP CAGR: 12.44%
Nifty Small Cap 250 Index (2013–2023):
- Daily SIP CAGR: 13.31%
- Monthly SIP CAGR: 13.29%
The takeaway? While daily SIPs may offer marginally better rupee cost averaging due to higher investment frequency, the actual return difference is negligible in the long run.
This confirms what most SIP experts and SIP consultants recommend: when choosing between daily SIP vs monthly SIP, focus less on theoretical return differences and more on practical factors like ease of tracking, fund availability, and alignment with income cycles—especially if you’re considering SIP plans for NRIs or investors with varied financial commitments.
Perspective from a SIP Advisor or SIP Consultant
Professional insights from a qualified SIP advisor or SIP consultant often lean in favour of monthly SIPs for the average investor. Here’s why:
- Simplicity Matters: Fewer transactions and easier management foster long-term consistency.
- Cost Efficiency: Reduced transaction load means fewer associated charges.
- Better Suitability: Monthly SIPs match most individuals’ income and expense cycles, making them easier to integrate into financial planning.
However, a seasoned SIP expert might suggest daily SIPs in specific situations:
- If the investor has irregular income (such as freelancers or business owners).
- If the investor is actively involved in market movements and seeks to capture daily NAV shifts.
- For NRIs exploring SIP plans for NRIs to offset currency fluctuations or optimize returns across global markets.
Ultimately, the best SIP frequency is not a one-size-fits-all decision. A good advisor tailors their recommendation based on individual goals, income patterns, and risk appetite.
SIP Plans for NRIs: Should You Go Daily or Monthly?
When it comes to SIP plans for NRIs, choosing the right frequency becomes even more critical due to additional layers like currency conversion, international remittances, and cross-border tax regulations.
Why Monthly SIPs Often Work Better for NRIs:
- Aligned with Remittances: Monthly SIPs coordinate easily with scheduled fund transfers from foreign bank accounts.
- Simplified Compliance: Fewer transactions make it easier to track for taxation and regulatory compliance across jurisdictions.
- Income Cycle Compatibility: NRIs with stable monthly earnings abroad find monthly SIPs easier to manage.
When Daily SIPs Might Make Sense:
- Volatile Market Exposure: If an NRI wants to reduce timing risk in high-volatility emerging markets like India.
- Forex Management: Making smaller, more frequent investments may help manage currency exchange fluctuations more efficiently.
In either case, it’s best to consult a qualified SIP advisor or SIP consultant who has expertise in managing international investment portfolios. These professionals can tailor a SIP plan that fits your income frequency, tax exposure, and financial goals—ensuring you get the most out of your cross-border investments.
Final Verdict: Which One Is Better?
So, which SIP mode should you choose? It depends on your financial habits, income cycle, investment goals, and willingness to manage complexity.
Choose Daily SIP If:
- You have irregular income or cash inflow.
- You’re investing in a highly volatile market.
- You can handle complex taxation and transaction tracking.
- Your chosen mutual fund offers a daily SIP option.
Choose Monthly SIP If:
- You receive a fixed monthly salary.
- You prefer ease of tracking and lower maintenance.
- You want broader fund availability.
- You’re an NRI looking for streamlined SIP plans for NRIs with fewer complications.
Pro Tip: Always prioritise the quality of the mutual fund over the SIP frequency. A high-performing fund with a solid track record—recommended by a trusted SIP advisor or SIP consultant—will usually outperform a less suitable fund, no matter how frequently you invest.
The frequency of your SIP matters—but not as much as choosing the right fund and staying consistent with your investment strategy.
Conclusion
In the debate of daily SIP vs monthly SIP, the better choice ultimately comes down to your lifestyle, goals, and preferences. For most investors—especially NRIs and salaried individuals—monthly SIPs are more practical, efficient, and easier to manage.
While daily SIPs offer finer cost averaging, the added effort in terms of compliance, tax filing, and recordkeeping rarely justifies the tiny edge in returns. A seasoned SIP consultant or SIP expert can help tailor your investment frequency to your unique situation. If you’re just getting started, consult a SIP advisor to create a strategy aligned with your financial goals. And remember—regardless of whether it’s daily or monthly, the real power of SIPs lies in consistency and discipline.
