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We all want to make the best out of our investments. When it comes to buying something, we all want it at the best (lowest) price possible – be it while booking a flight or vacation or buying mutual funds or stocks. Hence, we try to buy low and sell high. But timing the markets has often resulted in investors burning their fingers. SIPs in mutual funds help you deal with market volatility over time. The mutual fund house allows you to pick a suitable date for SIPs. Let’s see which is the best date for sip in mutual funds.

Which Date is Best for SIP in Mutual Fund?

When you are given an option to pick any date in the month for your SIP investing, it often becomes difficult to narrow down on one. Different investors have different theories per their convenience. Some say it is best to invest during the start of the month, while some say it’s best to schedule your SIPs towards the end of the month. Usually, at the end of the month, the markets are volatile due to F&O settlements. While some argue mid-month is best.

Well, everyone has their own theory and strategy. But let’s see if the SIP date really matters while investing. Let’s assume Mr Kumar started his investment journey in January 2010. He stopped his SIPs in December 2019. He was investing in the Nifty 100 index, and the SIP amount was INR 10,000 per month. Let’s see how different his returns would have been if his SIP date was 1st, 5th, 10th, 15th, 20th, 25th or 28th.

Nifty 100 SIP DateValue of InvestmentIRR
1₹20,61,26510.43%
5₹20,63,43610.47%
10₹20,63,04910.49%
15₹20,59,67610.49%
20₹20,57,92610.50%
25₹20,63,60110.58%
28₹20,58,05510.54%

When looking into the value of the investments (at the end of the tenure), there isn’t much difference in the returns. Irrespective of the SIP date, the returns are almost the same. Where the IRR fluctuates in the range of 10.43% to 10.54%. The highest IRR was when the SIP date was 25th (10.58%). While the lowest IRR is for SIP on the 1st (10.43%). A difference of 0.15%.

However, when you compare the difference in value terms, it is hardly INR 2,300. Thus, since there is a negligible difference in value, it proves that the SIP date doesn’t really have much impact on your returns.

No SIP Date Advantage

Each of us can pick our favourite fund and run a similar exercise and compare the XIRR. To our surprise, the results may be different. For instance, considering the above example, the SIP date of the 25th may help Mr Kumar generate slightly higher returns. Thus, the suitable date is the 25th. Similarly, when comparing different funds belonging to different sectors and categories, the results may not conclude that the SIP date of the 25th is the best date. Some funds may have the best SIP date as the 1st, while some 5th and others 28th. Since markets are unpredictable, it is difficult to tell that a certain date is the best one for SIP.

The entire idea of SIP investing is to not worry about timing the markets. Any day can be the best day. As seen in the above example, the returns are not drastically different. The difference in gains is almost negligible. SIP investing is all about investing regularly without skipping your SIPs, and this will ultimately help you in rupee-cost averaging.

Therefore, don’t worry about the best date or worst date. Pick a date that you are comfortable with, be consistent with your investments, and have a long-term horizon.

What Should You Do?

It can be overwhelming when you are starting your investments. You may be in constant doubt ‘Is this fund the right one?’, ‘Is my SIP date the best?’, ‘Is my SIP amount sufficient?’, etc. All these doubts and questions are natural. Getting cold feet while starting your investment journey is also natural. Stick to the fundamentals, and you will be alright. While investing in SIPs and selecting a suitable date for your SIP, you should keep the following things in mind:

1. Don’t Try to Time Your SIPs

SIP investing is all about averaging out the market volatility over time and investing regularly. Picking any date is the same, and the returns will not deviate much. For the above-mentioned example, it was quite evident that the returns did not deviate too much when the SIP dates were different. Therefore, the SIP date doesn’t play a role in maximizing the overall returns. Thus, it is wise to consider a date that will suit your financial obligations.

2. Have Sufficient Funds in the Bank Account

For the majority of salaried investors, salary is deposited in the bank account during the first week of each month. For independent contractors, payment terms may vary. Similarly, the first week of the month does not ensure an income inflow for self-employed individuals. So, they may pick the middle or even the last week of the month for SIP investments.

SIPs are auto-debit investments, where the money will automatically be debited on the SIP date from your bank account. Therefore, you should pick a SIP date on which you are certain you will have sufficient funds in your bank account. In case of insufficient balance, your SIP will be skipped, which may impact your returns.

On the other hand, you have adequate funds in your account and are not reliant on the influx of funds. You can invest at any time, i.e., pick any date.

3. Diversify With Your SIPs

Suppose you have multiple SIPs and want to spread your investments across the month. You can do so. Pick one date for one SIP, another date for the second one and so on. Pick a suitable date that best matches your SIP needs based on your financial comfort, availability of funds, and investment strategy.

To Conclude

Mutual funds do not mandate any particular deadline for SIP investments. The best date for SIP is the one that you are comfortable with. Every investor is unique, and so is their financial situation. Therefore, you should choose the SIP date after considering your access to funds. 

When investing in SIPs, you should have sufficient funds in your bank account after meeting all your financial responsibilities. Therefore, choose a date keeping the access to funds in mind because you do not want to miss/ skip any instalment due to lack of funds.

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