Which is the Best SIP date for mutual fund SIP investments in India? This is one of the questions that I often get from readers (as well as my financial planning clients).
Some similar questions are – Which is the best date for SIP in mutual funds? OR Is there a best day/date for SIP every month? OR Can I get higher returns if I chose the perfect date for SIP? OR What is the best time in a month to invest in my SIP? OR Can SIP investing on particular dates lead to higher returns?
Most of you would be investing via SIP (systematic investment plan) or lumpsum in mutual funds. But while lumpsum investing is more about getting the timing right, SIP is less about timing and more about averaging out your investments in mutual funds. But even within this concept of ‘averaging the investments’, many want to maximize SIP returns. And how do they plan to do it? By trying to find out the Best SIP date every month.
But in reality, is there any best SIP date for mutual fund investments? Apart from the obvious benefits of SIP in mutual funds, are there any additional benefits of investing on particular SIP dates?
Some MF investors feel it’s better to invest during the start of the month, i.e. 1st to 10th of the month. Many others feel it’s best to spread your multiple SIPs across different monthly dates (like 1st, 5th, 10th, 15th, 20th, 25th of the month, etc.). Then there are many technically oriented ones who think that investing during the last few days of the month (or around the last Thursday of the month, i.e. monthly expiry when volatility can be quite high) is a better bet when it comes to picking the best SIP dates for mutual fund investments.
We can pick a few funds (or popular indexes like Sensex or Nifty 50) and run hundreds of back-tests to find out which are the Best SIP dates and Worst SIP dates. But there is a problem with this approach. You may get one set of dates as the best SIP dates for one fund/scheme. And you may get another set of best days for SIP for another fund. If you repeat this for all the available funds in the markets (around 1700+ MF schemes at last count), I am sure you will get different results for different funds. You may get different best SIP dates for active funds vs index funds. And then you will try to find a pattern in that data set. But can you ever be sure whether you will get the same result for best date SIP in future as you got for a particular fund in the past? No, you can’t.
The intent of some people asking questions like “Which is the Best date for SIP in Mutual Fund?” is mostly to try and generate extra returns by timing the SIP! And that sounds funny because SIP is built on the premise of not trying to time the markets! And if you really have to time the markets, then you should be willing to do lumpsum vs regular SIP. Isn’t it?
I am sure even if you somehow do arrive at a theoretical best SIP date and worst SIP date and compare the historical returns over the long term, I think the difference in returns between the best and the worst SIP date will not be too much to write about.
So for most cases, there is no SIP date advantage as such. And given the very premise on which the whole concept of SIP is built, i.e. rupee-cost averaging in SIPs in a mutual fund, I think you will not gain any systematic advantage by selecting one particular date over another one when picking SIP dates.
So how should you choose SIP dates in a month?
My suggestion would be to keep it very simple. The first thing to ensure is that on the day of SIP, your account should have sufficient funds. Right? So if you are a regular salaried person, then chances are that your account will have more money during the start of the month rather than the end of the month (when money people living paycheque to paycheque run out of cash). So for you, it might be better to have a SIP date towards the start of the month when you have money. You don’t want to miss out on SIP investments due to insufficient funds in your bank account.
That is my view on the debate of choosing the SIP date at beginning of month Vs SIP date at end of month.
Note – NAV link
And mind you, I am not saying this (to keep SIP dates during the start of the month) because I am after commissions like MF distributors. I am a Fee-Only SEBI Registered Investment Advisor (RIA) and I don’t get any commissions from anywhere. I am just saying this because it is an easily implementable strategy for most SIP investors.
For different funds/schemes, the BEST SIP Date will be more random than orderly. So please do away with this unnecessary fascination with the Best Date Day for SIP.
There is no secret strategy for the best SIP date. And there is no perfect date for SIP investment.
Some are of the view that the End of the month / Near the date of expiry (dates like 25th to 31st of every month) are the best SIP dates. And many experts claim that the best day for SIP is the last Thursday of the month.
So that was about which are best SIP date & worst SIP date. And if you are hell-bent on finding some pattern in the huge data about the percent gain that the best SIP date has over the worst SIP date, then you may even be able to find it. But I think this is not the right use of your time or efforts.
The best approach would be to pick a SIP date that is comfortable and convenient for you from your monthly cashflow perspective, and then, focus on more important things like regular rebalancing, increasing SIP every year, picking the right funds, investing the right amount for all your different financial goals.
Trying to find out the best SIP date in a month is a fool’s errand that won’t benefit you much. So don’t waste your time on this futile exercise!
But also understand that if it gives you some comfort in trying to find out your favourite SIP date, then go ahead and look for it. Don’t worry about what I am saying here or what others are saying about the best SIP dates. After all, it is your money and you should do what feels fine with you. Right?
That said, just remember there is no one answer to the best SIP date for mutual funds. I would suggest you stop looking for the right date for SIP investment or the Best SIP date for mutual fund SIP investment. SIP is a great strategy in itself. So forget about trying to time your SIP investments and instead, focus on investing the right amount in the right mutual fund portfolio instead. So that was all about which is the Best SIP date for mutual fund investments in India (2021)?