Mutual fund investors often prefer starting their Systematic Investment Plans (SIPs) at the beginning of the month, shortly after receiving their salaries. Others believe investing in the middle or toward the end of the month could deliver better returns because of market volatility, including fluctuations around Futures and Options (F&O) expiry dates.
But does your SIP date really make a difference to your final corpus? Or is the impact of choosing the 1st, 10th or 20th of the month negligible over the long term? Here is what investors should know.
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Can Your SIP Date Change Your Final Corpus?
The date on which you invest through an SIP can influence the number of units you purchase at different market levels. However, over a long investment horizon, the difference between choosing different dates is generally small and depends on market movements.
Since SIPs involve investing a fixed amount at regular intervals, investors buy more mutual fund units when prices are lower and fewer when prices are higher. This approach helps spread investments across different market conditions, although it does not guarantee returns or protect against market losses.
Over 15 years, the impact of selecting a particular date each month will depend on the market's performance during that period. There is no universally superior SIP date that consistently delivers better returns.
SIP Date vs Returns: Does Timing Make A Difference?
Consider an investor who invests Rs 10,000 every month through an SIP. The investor can choose to invest on the 1st, 10th or 20th of every month.
The final corpus may vary depending on the market levels on these dates and how the market performs throughout the investment period. Even if one date produces a slightly higher return over a particular period, the result may not hold for another period.
What Should Be The SIP Date?
For most investors, the best SIP date is the one that makes it easier to invest regularly without disrupting their monthly budget.
Choosing a date shortly after your salary is credited can help ensure that the SIP contribution is deducted before other expenses consume the available balance.
This makes investing a planned monthly commitment rather than something that depends on how much money remains at the end of the month.
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Investors should also ensure that sufficient funds are available in their bank accounts on the scheduled debit date to avoid failed transactions.
Rather than trying to predict market movements or select a date based on F&O expiry, investors can focus on maintaining their SIPs, reviewing their mutual fund choices periodically and staying invested according to their financial goals and risk appetite.
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