Which SIP is best?

SIP has been a game changer for Indian investors. Retail investors who used to be at the receiving end in the stock markets have benefited the most out of SIP’s in equity funds. Apart from advantages like accessibility to professional fund management and flexibility to invest even small amount of money, the real benefit of SIP has been its risk mitigation capability. Gradually investing through market cycles has helped in rupee cost averaging – without actually knowing about it.

So far... So good.

 

Mutual fund companies are primarily manufacturers of financial products. They keep launching new products to 'entertain' the investors. Many a times – they are least bothered if the products suits you or it makes any sense to investors. Their job is to increase the choice / range of investment options and capture maximum market share / increase their asset under management. It is the job of the investor to see if it makes sense to invest in them.

 

For instance, SIP started off with monthly investment option. Some Investors who have already made these monthly SIPs, may feel bored to start yet another monthly SIP. But they may be excited to try a variant – may be a weekly or daily SIP.

 

But in reality, is it really worth? - is a point to ponder:

 

1. A daily sip will have 200+ bank debit entries in an year - against 12 monthly debits.

2. And if you have 5 daily SIPs, you would have over 1000 bank entries - running to pages.

3. Inspite of that, it is ok if the daily sip adds value. A recent article published @toi clearly showcases the returns generated by various SIPs. The conclusion - no big advantage of daily sip over monthly sip. The difference is a paltry 0.02% to 0.06%.

4. And the fact most Indians don't maintain proper income tax accounts. It is their auditors who maintains these accounts. And they curse you if you bring in truck load of entries.

5. The Climax is when you sell these daily SIP investments. You need to compute the capital gain / loss against each SIP entry. And this can drive your auditors go crazy.

To sum up: Keep Investments simple. Don’t get carried away and fall a prey to the fancies and fantasies of the investment world. Do check for other factors like accounting convenience, effort-reward ratio etc before investing.

Investing in SIP's through market cycles...

"Think big, think fast, think ahead. Ideas are no one's monopoly." ~ Dhirubai Ambani

We can replace 'Ideas' with 'Knowledge'. And more and more investment managers come in... they debug complex concepts in simpler fashion. And most of them explain those there were not done earlier. In this knowledge economy - that is the BIGGEST Benefit. You can gain out of others wisdom. And the new entrants in to the industry - try to impress the investing public more than the older ones for obvious reasons.

The new kid on the mutual fund industry is https://capitalmindmf.com/. And I enjoy reading their newsletter by email. In their recent newsletter dated 1st May 2026, I was stunned with their write up on - "You want the bad years now - not later."

It was so impressive - thought of summing up the same for everyone's benefit.

In this article they discuss about the impact of investing in two schemes which has delivered end to end - same CAGR - 14% - over 10 years. The only difference is - in 1st scheme - 1st 5 years the NAV has risen steadily and flattered. In the 2nd scheme - it the the other way around - 1st 5 years has been bad and next 5 years has been good.

Now the scenario testing:

1) For a One time investor - the end result in both funds would be the same : 14%

2) But for SIP - the results are different. For SIP - B, when the 1st 5 years were bad - and NAV's were obviously low - each SIP investment would have accumulated more units. 

3) As a result - SIP started during BAD years gave better returns than those started during Good years.

But in reality - many investors worry / hold back investing during bad years. And worse - some of them stop their SIP's saying that the returns are not great only to restart when green shoots show up.

So the writing is clear on the wall - continue your SIP's in GOOD FUNDS irrespective of market conditions. Over a 10 year period - you never know when good or bad years come up. Infact, they alternate. As seen in either of scenario above - you make returns in both scenarios. But you can be lucky if you start your investments during tough times and tough times last for sometime - you hit a JACKPOT.