Article

Best Date for SIP in Mutual Fund
May 29 , 2013

Many a time investors come to us asking which the best date for mutual fund SIP investment is. Some also wanted to know whether splitting SIPs into two dates would make any difference to their returns.

We did a research to find out whether date matters in SIPs taking HDFC Top 200 as a sample fund.

Assume one had been investing Rs 1,000 every month for a period of 10 years (120 months) from 2003 to 2013. We calculated returns he would have earned based on NAV, if he invested on different dates 1, 5, 10, 15, 20 and 25 of the month.

Here's what it looked like

Date

Return rate

Final value of investment

1st

19.30%

Rs 3,31,698

5th

19.36%

Rs 3,32,901

10th

19.82%

Rs 3,40,950

15th

19.52%

Rs 3,35,719

20th

18.77%

Rs 3,22,362

25th

18.42%

Rs 3,16,287

1st & 20th

19.03%

Rs 3,27,030

5th & 25th

18.72%

Rs 3,24,594

1st & 15th

19.41%

Rs 3,33,708

5th & 20th

19.07%

Rs 3,27,631

25th & 10th

19.12%

Rs 3,28,619


Investing on the 10th instead of the 25th of every month in the same fund made a difference of over 1% with the difference in amount being close to Rs 15,000. If the SIP amount itself is increased the difference in final value would be greater.

We did this on a few more top diversified equity funds and this is what we observed:

Fund

  1st

  5th

  7th

  10th

  14th

  15th

  20th

  21st

  25th

  28th

Franklin India Bluechip

17.06%

 

18.07%

17.92%

 

 

17.64%

 

17.69%

 

HDFC Equity

18.81%

20.45%

 

20.08%

 

19.89%

 

19.98%

 

 

19.56%

 

DSP BlackRock

17.51%

 

18.51%

 

 

18.42%

 

 

 

18.23%

 

17.61%


Best dates for SIP

As far as possible let the SIP hit your bank account in the period between 5th and 10th of every month. Splitting of dates for SIP is a bad option and in fact brings your overall returns down. We suggest that you choose a date that is closer to your salaries. It should not happen that by the time SIP date hits your bank account has insufficient balance.

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