Daily vs weekly vs monthly SIP: Which is better?

Daily systematic investment plans (SIPs) have become popular in the mutual fund market due to their flexibility and accessibility. PhonePe Mutual Funds saw half a million unique daily SIP investors within six months, while Axis Mutual Fund launched its 'Rozana SIP', letting investors start with as little as Rs.10 per scheme per day.

Despite the rise in popularity, a comparative analysis of daily, weekly, and monthly SIPs across five active equity fund categories and time horizons from one to 10 years shows no consistent winner in terms of returns. The maximum spread between daily, weekly, and monthly SIP returns is only 0.88 percentage points.

The reason behind the growing interest in daily SIPs lies in the fact that they better align with the cash flow patterns of many investors. People with irregular income, like professionals or business owners, find daily SIPs more manageable. Additionally, daily SIPs enable easier cash flow management for those who receive money daily, making it a convenient choice. Notably, 77% of PhonePe's daily SIP investors come from tier II/III cities, and the average investment amount is Rs.50 per day.

Despite the negligible difference in returns, high-frequency SIPs are gaining traction due to their alignment with investors' cash flow patterns. Daily SIPs cater to the needs of micro-entrepreneurs and self-employed individuals who receive money almost daily. For such investors, managing monthly debits can be more challenging than making smaller daily investments.