Daily SIP Mutual Fund: How to Invest in Mutual Fund Daily SIP in 2024?
In today’s competitive world, word of mouth remains one of the most powerful marketing tactics. Recently, the term ‘Daily SIPs’ took a swing attracting young investors. Daily Systematic Investment Plans, or Daily SIPs, represent a modern and dynamic approach to investment that aligns with the preferences and lifestyle of the tech-savvy and socially connected generation. However, there are a few who might be new to the equity market, you can explore SIPs as for many it may be a safe starting point. Let’s understand this concept better.
SIPs: A Brief Overview
Most of the dramatic changes in people’s lives come from doing tiny tasks every single day. Applying a comparable financial discipline can yield profound effects on our investment journey. How about setting a small amount, say Rs 100, every single day towards a mutual fund? That would be great and still, it doesn’t hurt the pocket. Recognizing the potential challenge of sustaining such consistency over the long term, we’ve streamlined the process to ensure minimal effort on your part. No need for deliberate actions to set aside the money – we’ve made it effortlessly seamless for you via SIP or Systematic Investment Plans.
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-liked 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, making it convenient for them.
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. While mutual fund daily SIP offer flexibility and convenience for investors who prefer smaller daily contributions, it is crucial to assess the associated profitability and tax implications before choosing this investment strategy.
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: Businessmen find Daily SIPs convenient.
- Account maintenance: To easily track returns, consider using a different bank account for funding Daily SIPs, though it’s not mandatory.
- Automatic Deduction: 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: Despite contributing to the SIP daily, returns may not be received daily; instead, the mutual fund company distributes profits in the form of dividends. The company is not obliged to declare dividends if there are no profits.
- Dividend Distribution Tax: Mutual fund companies pay dividends after deducting the dividend distribution tax. Opting for a growth fund will result in reinvested returns, potentially leading to higher overall gains.
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:
- Mutual Fund Company Websites & Investment Apps: Many mutual fund companies like HDFC Mutual Fund, Nippon India Mutual Fund, and ICICI Prudential Mutual Fund offer Daily SIPs directly on their websites. Also, there are several daily SIP mutual fund apps that are easily accessible to investors.
- 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.
3. Choose Your Mutual Fund Scheme
With the list of Daily SIP mutual funds, you can invest in any open-ended mutual fund scheme. Consider your investment goals, risk appetite, and investment horizon when choosing a scheme. You can research different schemes online or consult a financial advisor for recommendations.
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, but daily investments potentially take it a step further. 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 maximized 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
While the concept of daily investments may seem enticing, navigating this financial landscape demands a discerning eye. 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 analyze, making it harder to get a clear overview of your investment performance. Consider using portfolio management tools or platforms that offer easy-to-understand visualization of your daily SIP investments.
- 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?
SIPs are often linked with monthly investments for a good reason. There is a reason for that.
The growth prospects of the best daily SIP mutual fund largely depends on the fund management. Therefore, you must evaluate the credibility and strategy of the specific Mutual Fund before investing in daily SIPs investment plans.
As you saw, investing monthly brings various benefits, and it aligns seamlessly with the common monthly income cycle. So by all means, salaried investors can go for monthly SIPs due to their common income cycle. However, for daily wagers, daily SIPs can be a suitable option.
While the best daily SIP mutual fund may contribute to diversification, monthly SIPs excel in offering superior investment planning opportunities. Managing weekly or daily SIPs can be more intricate and result in multiple entries in your account, whereas monthly SIPs can provide a more streamlined approach.
Well, this discussion may go on further to prove which is the best option, but ultimately it’s your call.
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 due to certain reasons. 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. However, it can be beneficial for daily wage investors as a small amount set aside doesn’t hurt anyone.
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.
