Investing in mutual funds through a systematic investment plan (SIP) is a popular way for many Indians to grow their money over time. One of the key decisions an investor needs to make when starting an SIP is the frequency of the investment – weekly, monthly, or quarterly. While all three options have the potential to provide similar returns over a long-term period, some investors wonder if one frequency is better than the other. Specifically, the question of whether weekly SIPs fair better compared to monthly or quarterly SIPs is a common one.
To answer this question, let’s take a look at the returns of a few popular mutual funds over a 10-year period, with all three options of weekly, monthly, and quarterly SIPs. The HDFC Equity Fund, a popular equity-oriented mutual fund, has provided an annualized return of 14.03% over the past 10 years for a monthly SIP, 14.17% for a quarterly SIP, and 14.26% for a weekly SIP. Similarly, the ICICI Prudential Bluechip Fund, another popular equity-oriented mutual fund, has provided an annualized return of 13.65% over the past 10 years for a monthly SIP, 13.74% for a quarterly SIP, and 13.83% for a weekly SIP.
These examples indicate that over a 10-year period, there is not much difference between the returns provided by weekly, monthly, and quarterly SIPs in the case of these mutual funds. While weekly SIPs have slightly better returns than monthly or quarterly SIPs, the difference is not significant enough to make one frequency a clear winner over the others.
It’s important to note that mutual fund returns are not guaranteed and depend on various factors such as the performance of the fund, market conditions, and the investor’s risk appetite. Additionally, the difference in returns between the different frequencies may vary depending on the mutual fund and the period of investment.
It’s also worth noting that the returns between different frequencies of SIPs can also be affected by the timing of the investment. Investing at the right time can have a significant impact on returns, regardless of the frequency of the SIP. This is why it’s important to have a long-term perspective when investing in mutual funds and not to get too fixated on short-term returns.
Another important factor to consider when choosing between weekly, monthly, or quarterly SIPs is the amount of money you can comfortably invest at each interval. If you can only afford to invest a small amount of money at each interval, weekly SIPs may be a better option as they allow you to start small and gradually increase your investment as you get more comfortable. On the other hand, if you have a lump sum amount of money to invest, a quarterly SIP may be more suitable.
In summary, the frequency of SIPs you choose does not have a significant impact on the returns you can expect to receive over a long-term period. It’s important to choose the frequency that aligns best with your personal preferences and financial situation, and to have a long-term perspective when investing in mutual funds. It’s also important to consider timing of the investment and the amount of money you can afford to invest at each interval.
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