Greetings, First of all ! In today’s Post we will discuss Which is the best date to start an SIP? This is one of the most common questions that is being asked by Investors. Who took their SIPs in mutual funds seriously. This becomes my responsibility to let you know the fact around it and I will also share some results that I studied.
The Best Date to Start an SIP:-
See the chart below to check the SIPs done on different dates in NIFTY 50 TRI from Oct 2002 to Sep 2022 (20 years).
To be honest, This question also came to my mind when I started doing SIP of larger amount. My thought was quite simple at that time,”Which date should I select to earn better returns ? (I hope this is the same reason as yours )” And I started digging down the deeper.
What I found might seem surprising to you but it is actually the truth that I am going to tell,
” Selection of SIP dates does affect your returns much.”
Will the returns be same in all dates ? Mathematically answer is no, not because one date will outperform by very high margin or so. Because mathematically there will be slight dfference between the two returns on different dates. Example- 12.12% is not equal to 12.15%, but literally tell me which one will you choose, if given choice, first one or second one?
Why different dates ?
Being Human, we always want ourselves to be better than others. We want the SIPs that we are doing must earn higher returns everytime than others. So, we want to buy the NAV low (Net Asset Value – The daily price of a unit of Mutual Fund you are investing in).
But, this is not the case and professionals understand that. Have you observed any professional suggesting the different dates for different SIPs without any concrete reasons (just to earn high returns).
Myths & Facts around Different Dates :-
(a) Myth:- Select the early week dates of month because most of salaried people invest in markets and have automatically SIPs dedcuted as soon as salary credits, so when larger amount SIPs go to AMCs, they will start buying and market is going to up.
Fact :- AMCs do not invest as soon as they get the money. Rather, Fund Manager waits for opportunities.
(b) Myth:- Select month last dates, as data shows (which nobody sees), during month last, market always falls and we will buy low.
Fact :- No such data exists in the market, if you see data of at least last 20 years.
(c) Myth:- End month is best due to Derivatives expiry (Derivatives – Core purpose of this Product is to hedge someone’s portfolio)
Fact :- It does not follow a predictable pattern. And if you think you can predict something than you are in wrong product right now (in SIP).
(d) Myth:- Month’s date 1 gives more time to compounding (Laugh it off).
Fact :- The logic is okay for lumpsum investments but not for recurring SIPs over 10, 20 , 30 years. It eases down.
(e) Myth:- Instead of doing one monthly SIP, divide it into four weekly ones to have better cost averaging.
Fact :- SIP itself is product designed to provide you rupee cost averaging. And doing four weekly SIPs statistically gives no big difference.
Conclusion:-
No date is perfect date, If you still had some doubt left. To get rid of this doubt, Start doing SIP on your Date of Anniverary if you are married otherwise Start SIP on your Date of Birth, after consulting your Advisor.
Never choose mutiple dates for SIPs, by doing so you are just increasing complexities of tracking more NAVs.
SIP is start and forget kind of Instrument, if you are doing it in passive funds and Please review if you are doing into active ones with your Financial Expert.
Remember that the key to financial success is patience, discipline, and continuous learning. Do not hesitate to meet an expert who can help you provide a proper asset allocation, meet an expert, in case you think you need one.
Let’s know in the comment section, if you need to clarify your doubts, Further you can contact us by visiting our ABOUT US page in MAIN MENU. Or Simply chat us by clicking on whatsapp icon given below.
From meriSIP.com team
testing
successful testing