Daily SIP vs Monthly SIP: Which One is Better?

Investing through Systematic Investment Plans (SIPs) has become a go-to strategy for many investors looking to build long-term wealth through mutual funds. One of the reasons SIPs are so popular is their simplicity you invest a fixed amount at regular intervals, helping you stay disciplined and consistent without worrying too much about market timing.

But a common question investor often face is: What’s the suitable SIP frequency daily or monthly?

Both daily and monthly SIPs have their own pros and cons, and the choice depends largely on your income cycle, financial goals, and investment personality. In this article, we’ll dive deep into how daily and monthly SIPs work, compare their benefits, and help you decide which one may be a better fit for you.

Understanding SIP Frequency: Daily vs Monthly

What is a Daily SIP?

A daily SIP involves investing a fixed amount every business day (excluding weekends and market holidays) into a mutual fund scheme. For instance, if you choose to invest ₹500 daily, this will typically be auto-debited around 20–22 times a month, depending on the number of trading days.

The idea is to spread your investments evenly, reducing exposure to daily market volatility. It also enhances rupee cost averaging, which helps bring down the average purchase price of mutual fund units in fluctuating markets.

What is a Monthly SIP?

A monthly SIP is the most common and traditional way of investing in mutual funds. In this format, a fixed amount is invested once a month on a date chosen by the investor (for Eg: the 5th or 15th of every month).

Monthly SIPs are especially popular among:

• Salaried individuals who get paid on a monthly basis
• Investors who prefer a set-it-and-forget-it approach
• People following a structured monthly budget

Monthly SIPs are easier to manage and require minimal monitoring once set up with auto-debit instructions.

If you're just beginning your SIP journey, you may want to read our detailed guide on What is SIP which breaks down how SIPs work and why they’re a great fit for long-term investors.

Key Differences Between Daily and Monthly SIP

Aspect	Daily SIP	Monthly SIP
Investment Frequency	Every business day (20–22 times/month)	Once a month
Cost Averaging	More frequent averaging	Averaging once a month
Volatility Management	Smoother due to spread-out entries	Potentially higher exposure
Monitoring & Effort	Requires more oversight	Minimal effort after setup
Convenience	Needs more tracking or automation	Highly convenient and aligned with income cycles

If you're wondering whether to invest through SIPs at all or go with a one-time investment, check out our blog comparing SIP vs Lumpsum to make an informed decision.

Benefits of Daily SIP

1. Better Cost Averaging

Daily SIPs can capture market fluctuations more effectively. Since investments happen every day, you buy more units when the market dips and fewer when it rises. Over time, this could help lower the average cost of your units especially useful in volatile or sideways markets.

2. Smoother Ride Through Volatility

Markets move every day. By investing more frequently, daily SIPs help dilute the impact of sudden spikes or dips in the market. This can lead to a smoother investment experience, especially in the short term.

3. Enhanced Power of Compounding

Although the long-term effect might not be massive, investing more frequently allows your money to be in the market sooner. Even a few days’ head start every month, compounded over years, can potentially result in better growth.

4. Lower Market Timing Risk

Investing every day significantly reduces the chances of making a lump-sum investment when the market is at a high. This regular entry smoothens the investment journey and minimises timing-related risks.

Benefits of Monthly SIP

1. Simple and Convenient

Monthly SIPs are easy to understand, set up, and monitor. You only need to ensure you have sufficient balance in your bank account once a month. It’s suitable for busy investors who want minimal involvement.

2. Well-Aligned with Income Patterns

Since most people receive their income monthly, it’s logical and easier to commit a portion of that income toward investments once a month.

3. Promotes Financial Discipline

Monthly SIPs encourage a budgeting mindset. It becomes a fixed expense, much like paying a utility bill or rent, helping investors build consistent saving habits.

4. Lower Monitoring Requirement

Unlike daily SIPs, monthly SIPs don’t require regular checks or multiple entries in your statement. It's a good fit for those who prefer a passive investment style.

Which One is Better?

There’s no one-size-fits-all answer. The better SIP frequency depends on your unique situation. Let’s look at a few guiding points:

Factor	Suggested SIP Frequency
Time Availability	Daily SIP needs more oversight, Monthly SIP is hands-free
Volatility Sensitivity	Daily SIP offers smoother experience
Convenience Preference	Monthly SIP is easier to manage

 

What About Returns?

Contrary to popular belief, daily SIPs don’t necessarily generate significantly higher returns than monthly SIPs over the long term. The primary benefit lies in smoother entries and better cost averaging not drastically better performance.

What makes a real impact is:

• The fund you choose
• The duration of your investment
• The discipline to stay invested through market cycles

Key Takeaways:

Whether you invest daily or monthly, consistency is the real game-changer. SIPs, regardless of frequency, bring the advantages of discipline, automation, and rupee cost averaging. The key is to choose a format that fits your lifestyle and helps you stay committed.

• If you like to keep things simple, want to align investing with your salary, and don’t want to monitor your portfolio often, monthly SIPs are a great choice.
• If you're more hands-on, earn daily or irregular income, and want to spread your investments as much as possible, a daily SIP may suit you better.
• At the end of the day, it's not about finding the perfect frequency it’s about choosing a path you’ll actually follow for years to come.

To explore other options, you can also look at the types of SIP available and choose one that suits your needs.

FAQs

Q1: Is there a major difference in returns between daily and monthly SIPs?

While daily SIPs can provide slight advantages in rupee cost averaging, the overall long-term returns are generally comparable to monthly SIPs, making the difference minimal for long-term investors

Q2: Who should consider daily SIPs?

Daily SIPs are well-suited for investors who don’t mind tracking their investments regularly and want to manage market volatility more actively through frequent contributions.

Q3: Are monthly SIPs good for beginners?

Monthly SIPs are simple, convenient, and perfect for salaried individuals or anyone starting their mutual fund journey.

 

Disclaimers

Investors may consult their Financial Advisors and/or Tax advisors before making any investment decision.

These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.  The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

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