Want to invest in Daily SIPs: Here's all you need to know 

Mutual fund houses have introduced Daily Systematic Investment Plans (SIP) through which one can invest a fixed amount of money through the SIP route in a Mutual Fund every business day. Daily SIPs may come in handy for those who are daily wage earners. 

Some studies indicate that the frequency of Systematic Investment Plans (SIPs)—whether daily, weekly, or monthly—does not significantly affect investment returns. Over time, the variations in returns among these options are minimal. However, if you choose daily SIPs, you may find it challenging to keep track of your investments, making monthly SIPs a more practical option, especially for those with a fixed monthly salary as it aligns better with your income cycle.

Another cons of this investment route is that daily SIPs can be influenced by investments in mid-cap and small-cap stocks, which tend to be more volatile. Consequently, investing daily in such funds may result in greater fluctuations compared to monthly investments. However, if you're investing in large-cap funds, daily SIPs can yield more stable returns.

For individuals earning daily wages, daily SIPs can be an appropriate choice. However, salaried workers might still prefer monthly SIPs, ideally timed to coincide with their salary deposit for added convenience.

Increasing SIP frequency, such as transitioning to daily or weekly contributions, might not enhance returns. Additionally, opting for daily or weekly SIPs can introduce complexities related to record-keeping and tax implications.

Types of SIPs 

SIPs can be classified on the basis of their tenure. 

Monthly SIP: A fixed sum is invested monthly in the Mutual Fund.

Weekly SIP: A fixed sum is invested in the Mutual Fund scheme.

Daily SIP: A fixed sum is invested daily in the Mutual Fund.

While many investment platforms facilitate monthly SIPs, they may not support daily or weekly options. This means you would be responsible for executing those transactions personally, requiring you to set reminders and make time in your schedule—whether that’s every day or week.

Moreover, your record-keeping requirements will increase significantly. If you stick with monthly SIPs, you’ll have twelve transactions per year for each fund. In contrast, choosing weekly SIPs results in a staggering fifty-two transactions annually per fund.

Tax management becomes more complicated with daily or weekly SIPs, as each SIP represents a new investment that must be recorded separately. This can increase administrative workload without correlating with proportional benefits. While the fund house may provide detailed statements, managing numerous pages of PDFs is likely to become overwhelming.

Ultimately, to boost your returns from SIPs, it’s all about maintaining a consistent and disciplined approach while steering clear of common pitfalls. Whether you opt for daily or monthly SIPs, the essential aim is to remain dedicated to your investment path and enjoy the rewards of compounding as the years go by.