Many mutual fund investors prefer to start their Systematic Investment Plans (SIPs) at the beginning of the month, assuming that investing immediately after receiving their salary is the smartest financial move. Then there are some who think that picking a date toward the middle or end of the month could yield better returns due to market volatility, especially around the time of Futures & Options (F&O) settlements.
Confused? Are these just assumptions, or are they true? Does the timing of your SIP really influence your final corpus? Let's find out.
Can Timing Change Your Final Corpus?
Data suggests that the final corpus doesn't change, at least not in any meaningful way. Over long periods of time, the impact of choosing a specific date tends to even out due to market randomness.
According to a study cited by Economic Times, SIP investments made on different dates (between the 1st and 28th of each month) over 10 years from February 2013 to February 2023 delivered nearly identical returns.
The returns from the mutual fund scheme ranged narrowly between 12.07% and 12.19%, while the benchmark index delivered slightly higher returns of 12.78% to 12.89%. In terms of the final corpus, a monthly SIP of Rs 10,000 grew to approximately Rs 22.4 lakh to Rs 22.62 lakh across different dates. The benchmark index yielded between Rs 23.25 lakh and Rs 23.48 lakh, again showing only marginal variation.
So, it is clear that the timing of your SIP date based on specific dates or perceived market patterns offers little advantage. What matters far more is consistency and aligning your investments with your personal cash flow. So, you should start investing automatically before you start spending.
What Should Be The SIP Date?
The beginning of the month, middle of the month or end of the month – the difference is not significant. It is recommended to select an SIP date that coincides with your salary credit. This approach ensures that investing becomes a priority, not an afterthought. Waiting until the end of the month to invest whatever remains often leads to lower contributions and, ultimately, a smaller corpus.
Remember that the success of your SIP depends less on timing the market and more on discipline, regularity, and long-term commitment.
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