SIP Frequency: Monthly or Weekly SIP – Which Gives Higher Returns?
A Systematic Investment Plan (SIP) is an investment method which lets an investor invest small and fixed amounts at fixed and regular intervals. These convenient investment plans have emerged as a method of choice for investing in mutual funds.
By choosing a SIP as a vehicle of your investment provides affordability and the periodic investments accumulate into a significant corpus over time. Also, the investments are spread across different market levels which reduces the impact of market volatility and regular investments encourage financial discipline.
If you are wondering how to decide the frequency of investment into the SIP and which scenario would provide higher returns, here are the two scenarios to help you decide.
Scenario 1: Monthly SIP of ₹10,000
SIP Frequency: Monthly
- SIP Amount: ₹10,000
- SIP Duration: 5 years
-Total SIP Installments: 60 months - Expected Return: 12% p.a.
- Total Investment: ₹6,00,000
- Final Corpus: ₹8,24,864
Scenario 2: Weekly SIP of ₹2,308
SIP Frequency: Weekly
- SIP Amount: ₹2,308
- SIP Duration: 5 years
- Total SIP Installments: 260 weeks
- Expected Return: 12% p.a.
- Total Investment: ₹6,00,080
- Final Corpus: ₹8,22,864
(The SIP amount in scenario 2 is adjusted to ensure the total investment remains the same as in scenario 1)
Monthly or Weekly – Which Works Best?
- By comparing the scenarios 1 and 2, the final corpus for the monthly SIP is higher than the weekly SIP
- The two scenarios prove that the lower frequency of investment does not lead to a loss in returns.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.