Daily SIP Mutual Fund: How to Invest in Mutual Fund Daily SIP in 2025?
Daily SIPs allow investors to contribute smaller amounts regularly, which can be particularly appealing for individuals with fluctuating incomes or those who prefer spreading their investments over shorter intervals. While this approach introduces flexibility and aligns with evolving financial habits, it is important for investors to thoroughly understand the associated benefits, risks, and tax implications before choosing this strategy. Let’s delve deeper into what Daily SIPs entail and how they compare with other SIP options.
SIPs: A Brief Overview
A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds. By investing a fixed amount at regular intervals, SIPs help inculcate financial discipline and take advantage of rupee cost averaging.
SIPs typically involve monthly or quarterly contributions, but newer options, such as Daily SIPs, allow for smaller, more frequent investments. For example, investing as little as Rs. 100 daily can make it easier for individuals to start their investment journey without feeling a significant financial burden. Understanding the associated risks, returns, and tax implications is essential regardless of the frequency. Mutual fund investments, including SIPs, are subject to market risks, and returns are not guaranteed.
Types of SIPs Based on Tenure
SIP comes in various types, with monthly and quarterly SIPs being widely favored. Now, you also have the option of investing in daily SIPs. However, it’s important to grasp the profitability and tax implications before opting for these financial products.
- Monthly SIP: This is a well-known option, available from various fund houses. You invest a fixed amount each month.
- Weekly SIP: Here, a set sum is invested on a weekly basis.
- Daily SIP: With this option, you invest a fixed amount every day. Some prefer this method to invest a small sum daily as it helps them spread their investments.
What are Daily SIP Mutual Funds?
Daily SIPs (Systematic Investment Plans) in mutual funds involve investing a fixed amount daily rather than the traditional monthly or quarterly intervals. This approach may allow investors to contribute regularly to their mutual fund investment, promoting financial discipline and potentially leveraging market fluctuations. Daily SIPs promote discipline, and the rupee cost averaging effect might help in volatile markets. However, profitability isn’t guaranteed, as mutual fund investments are subject to market risks.
Features of Daily SIP Funds
Instead of going through the hassle of investing in SIP funds on a monthly basis, explore the options of daily sip mutual fund schemes. Let’s have a look at the features.
- Convenience: Some investors may find the ideal to invest a sum every day convenient.
- Account maintenance: To easily track returns, you can consider using a different bank account for funding Daily SIPs, though it’s not mandatory.
- Automatic Deduction: You can ensure automatic deduction is set up to facilitate seamless transfers from your savings account to the mutual fund scheme. The returns will be automatically credited to your bank account.
- Dividend Distribution Tax: Mutual fund companies pay dividends after deducting the dividend distribution tax.
How to Start Daily SIP Mutual Funds?
Starting a Daily SIP Mutual Fund can be a great way to invest consistently and potentially grow your wealth over time. Here’s a step-by-step guide to get you started:
1. Choose Your Investment Platform
Several platforms offer Daily SIPs, each with its own features and fees. Some popular options include:
- Screeners: Investors can use screeners like the Tickertape Mutual Fund Screener to search for daily SIP mutual funds and evaluate them based on the 200+ filters available.
- Robo-Advisors: These automated investment platforms provide curated investment options and can help you set up Daily SIPs based on your goals.
2. Complete Your KYC (Know Your Customer) Process
KYC is a mandatory requirement for investing in mutual funds. You’ll need to submit your PAN card, Aadhaar card, and other documents to verify your identity and address. Most platforms allow you to complete KYC online.
4. Set Up Your Daily SIP
Once you’ve chosen your platform and fund, it’s time to set up your Daily SIP. Here’s what you’ll need to do:
- Select the “Daily SIP” option.
- Enter your desired investment amount.
- Choose the start date for your SIP.
- Link your bank account.
- Review and confirm your details
5. Monitor Your Investment
Once your Daily SIP is set up, it’s important to monitor your investment performance regularly. Most platforms provide tools and reports to track your progress. You can also review your fund’s NAV (Net Asset Value) to understand its performance.
What are the Benefits of Daily SIP Mutual Fund Schemes?
Daily SIPs offer several benefits over traditional monthly SIPs, particularly for individuals with specific income patterns or investment goals. Here are some key advantages:
Rupee Cost Averaging
This benefit applies to both daily and monthly SIPs. By investing smaller amounts more frequently, you buy more units when the fund’s Net Asset Value (NAV) is low and fewer units when it’s high, averaging out your cost per unit over time. This can be especially beneficial in volatile markets.
Compounding Power Boost
By investing every day, you put your money to work even faster. Even small daily contributions, when compounded over the long term, can significantly grow your wealth. This compounding effect is maximised with longer investment horizons.
Discipline and Habit Formation
Mutual fund daily SIP can be easier to stick to than monthly ones, especially for individuals with irregular income sources. The smaller, daily amounts feel less burdensome and can help solidify a regular investment habit.
Flexibility and Convenience
The best daily SIP mutual fund allows you to invest any surplus income you have on a given day, offering greater flexibility in managing your finances. Some platforms even let you adjust your daily investment amount as needed, providing control over your contributions.
Suitability for Specific Income Sources
Daily SIPs are ideal for individuals who receive income more frequently than monthly, such as daily wagers, freelancers, or business owners. This allows them to invest their earnings as soon as they receive them, rather than accumulating a lump sum and potentially delaying investment.
Steer Clear of the Potential Drawbacks of Daily SIP Plan
Now, it’s time to have a look at the major disadvantages of daily SIP mutual fund schemes.
- Increased Tracking Complexity: Tracking and managing a large number of daily SIP plan transactions can be complex and time-consuming. You’ll have more units to track and analyse, making it harder to get a clear overview of your investment performance.
- Lack of Immediate Returns: Despite contributing on a daily basis, investors may not witness immediate returns. The dividends are typically distributed periodically by the mutual fund company, and if there are no profits, dividends may not be declared.
Which is Better: Daily, Weekly or Monthly SIP?
The choice of SIP frequency—daily, weekly, or monthly—depends on an individual’s income flow, financial habits, and investment goals. Monthly SIPs are the most common option, aligning well with the salary cycle of most individuals. They simplify investment tracking with fewer transactions while enabling disciplined savings and leveraging rupee cost averaging effectively. For salaried investors, this option often provides a seamless integration with their budget.
Daily SIPs, on the other hand, cater to those with more irregular income patterns, such as freelancers, small business owners, or daily wage earners. By investing smaller amounts daily, these investors can manage their cash flow while maintaining consistency in their investments. However, this option may involve greater complexity due to frequent transactions, requiring additional effort to monitor and manage portfolios, as well as tax implications.
Weekly SIPs strike a balance between the two extremes, offering more frequent investments than monthly SIPs but without the higher transaction volume of daily SIPs. This approach can suit individuals with moderate income irregularities or those who prefer spreading their investments over shorter intervals.
Regardless of the frequency chosen, it is important to remember that the long-term returns from SIPs are generally consistent across different intervals. Investors should evaluate their cash flow, convenience, and tracking capability when making a decision. Consulting with a financial advisor is recommended to align SIP frequency with financial goals and risk tolerance.
To Wrap It Up…
In conclusion, Daily SIP mutual funds present a distinctive avenue for investors seeking a more frequent and disciplined approach to wealth creation. While the concept offers benefits such as consistent contributions, potential risk mitigation through daily averaging, and increased convenience for certain individuals. Therefore, investors should carefully weigh the potential benefits that may impact market volatility on daily contributions. As always, investors must do their own research and/or consult their financial advisor before investing.
FAQs
The Asset Management Company (AMC) may not impose a penalty in some situations. However, skipping an occasional SIP is generally not detrimental, but frequent missed payments can hurt your long-term investment goals.
Yes, you can. You can pause your SIPs, whether through online or offline channels, for a duration of up to six months.
Whether daily SIP mutual funds can be a good idea depends on your investment goals and risk tolerance.
The SIP frequency can be daily, weekly, or monthly, does not significantly influence returns. Over time, the variance in returns between daily, weekly, or monthly SIPs is minimal.
