SIP is a popular investment option for investors who are investing in mutual funds. They often think about figuring out whether they should invest Monthly or Daily. In this article, let us understand who should invest monthly and who should invest daily, and understand the difference between both modes of investment.

What is SIP?

SIP stands for Systematic Investment Plan. It’s like saving a little money regularly to grow it over time. Imagine you put a small amount in a piggy bank every day or every month, but instead of a piggy bank, it’s a mutual fund, a place where experts use your money to buy things like stocks or bonds to grow it.

For example:

• You decide to save ₹100 every day or ₹3,000 every month.
• This money goes into a mutual fund.
• Over time, it can grow because the fund makes profits.

The cool part? You don’t need to save a big amount all at once. Small, regular savings add up!

Daily SIP vs Monthly SIP: What’s the Difference?

Now, the big question: Should you save a little every day (Daily SIP) or a bigger amount once a month (Monthly SIP)? Let’s understand both.

Daily SIP

This is like putting ₹100 into your mutual fund piggy bank every single day.

How it works: 

You tell your bank, “Take ₹100 from my account daily and put it in my mutual fund.” It happens automatically.

PROS:

• If the market goes up and down a lot, you buy at different prices every day. This can help you get a better deal over time, like buying units at cheaper when they fall on a daily basis.
• It’s a habit like brushing your teeth daily.
• If you have extra cash every day, it’s a way to save it bit by bit.

CONS:

• Your bank might charge a tiny fee for taking money out daily.
• It’s a bit more work to keep track of so many transactions.
• If the market doesn’t move much, daily savings don’t make a huge difference.

Monthly SIP

This is like putting ₹3,000 into your mutual fund piggy bank once a month.

How it works: 

• You tell your bank, “Take ₹3,000 from my account on the 5th of every month for my mutual fund.” It’s automatic too.

Lets compare Daily SIP vs Monthly Sip

Does Saving Daily or Monthly Make a Big Difference?

Both daily and monthly SIPs use something called rupee cost averaging. It’s a fancy term, but it just means you buy more when prices are low and less when prices are high. Over time, this evens out the cost.

Let’s say you want to buy mangoes:

• If you buy a little every day, some days mangoes are cheap (₹50/kg), some days expensive (₹100/kg). Your average cost might be ₹75/kg.
• If you buy once a month, you might get them at ₹80/kg or ₹70/kg, depending on the day.

Daily SIP buys more often, so it might save you a tiny bit more if the market jumps up and down a lot. But in real life, the difference is very small like a few rupees after years.

For example:

• You invest ₹3,000/month (or ₹100/day) for 3 years in a mutual fund.
• If the fund grows the same way, your money might become ₹1,20,000 with a monthly SIP or ₹1,21,000 with a daily SIP. See? Not a huge gap!

Who Should Pick What?

Daily SIP is good for:

• People with lots of money who want to spread it out.
• Someone who gets paid daily or has extra cash every.
• People who love being super disciplined and want to invest in small bits.

Monthly SIP is good for:

• People with a job who get a salary every month.
• Beginners who don’t want to think too much about investing.
• Anyone who likes keeping things simple and easy.

Taxation on Daily & Monthly SIPs

Whether you choose daily or monthly, the tax rules are the same. If your mutual fund makes money, you might pay tax when you sell, but it doesn’t matter how often you invest.

Also, daily and monthly SIPs work the same in the mutual fund they buy units at the day’s price (called NAV). There is no big difference there.

What Do Experts Say?

Most financial advisors say that monthly SIP is best for most people. It’s easy, matches your salary, and you don’t need to check your bank every day. Daily SIP can be slightly better if you’re investing a lot of money or if the market is very up-and-down, but it’s not worth the extra effort for most of us.

How Should I Invest Daily or Monthly SIP?

• Monthly SIP is like a simple, reliable bike. It gets you to your goal without much fuss. Best for most people.
• Daily SIP is like a fancy scooter. It might feel cooler and could save a tiny bit, but you need to be okay with a little extra work.

Things to consider

1. Think about your money: Do you get paid monthly or have cash daily?
2. Decide easier, one big saving a month or a small saving every day?
3. Start small you can always change later.
4. Try a Cleartax SIP calculator online to see how your money can grow.

Conclusion

Both options are good to prefer, but compared to investing in between both, it is better to go with a monthly SIP so there will be no tensions about checking the bank account to see if the funds are available. If your bank account doesn’t have any funds, charges will be deducted in some cases due to the failure of the SIP. 

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