Rs 200 daily SIP vs Rs 6,000 Monthly SIP: Which can create higher corpus in 10, 20, and 30 years? See calculations
Rs 200 daily SIP vs Rs 6,000 Monthly SIP: Systematic Investment Plan (SIP) offers daily, weekly, monthly, quarterly, semi-yearly, and yearly deposits. Even if the overall investment amount is the same in either of the two or all cases, the corpus generated can vary because of the different numbers of compounding.
Rs 200 daily SIP vs Rs 6,000 Monthly SIP: Systematic Investment Plan (SIP) is a popular way to invest in mutual funds. The method provides an investor with the flexibility to invest as per their investment capacity. SIPs in mutual funds start with as little an amount as Rs 100. Most mutual funds have Rs 500 as the minimum investment amount. One can start daily, weekly, monthly, quarterly, semi-yearly, or yearly investments through SIP. Know what the difference is between them and which of the 2 SIPs—Rs 200 a day or Rs 6,000 a month—can help one generate a higher corpus in 10, 20, and 30 years.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is different between SIPs of different durations?
The basic difference is that the compounding will be slightly different because NAV rates of the same mutual fund scheme will change on a daily, weekly, monthly, or yearly basis. Since the net asset value (NAV) price of a mutual fund scheme changes every day. A daily SIP investor will purchase the NAV at 30 different rates, while a monthly investor will buy NAVs at 2 different rates in 2 months.
What is different between SIPs of different durations?
In the same way, a quarterly SIP investor will buy it at 4 different rates in a year, while a semi-annually SIP investor will purchase it at 2 different prices. The difference between two NAV prices forms compounding in a SIP investment. So, compounding will change.
Which of them can give the highest return?
There is no single choice, as it always depends on the NAV price, but there may be deviation in the returns of different duration NAVs in the long run. It may be because of different numbers of compounding.
In which SIP should one invest?
The best way for SIP investment can be to align one's investments with one's earning cycle. Some people may prefer daily, some weekly, and some monthly. However, the monthly SIP mode is the most popular among all since the income cycle for a lot of retail investors is monthly.
Calculations for the story
We will calculate a Rs 200 daily SIP investment and a Rs 6,000 monthly SIP investment at a 12 per cent annualised return for 10, 20, and 30 years.
Corpus from Rs 200 daily SIP investment in 10 years
The total investment in 10 years will be Rs 7,30,000, estimated capital gains will be Rs 6,81,470, and the estimated corpus will be Rs 14,11,470.
Corpus from Rs 6,000 monthly SIP investment in 20 years
The total investment in 20 years will be Rs 14,60,000; estimated capital gains will be Rs 46,36,792, and the estimated corpus will be Rs 60,96,792.
Corpus from Rs 200 daily SIP investment in 30 years
The total investment in 30 years will be Rs 21,90,000, estimated capital gains will be Rs 1,94,59,539, and the estimated corpus will be Rs 2,16,49,539.
Corpus from Rs 6,000 monthly SIP investment in 10 years
The total investment in 10 years will be Rs 7,20,000, estimated capital gains will be Rs 6,74,034, and the estimated corpus will be Rs 13,94,034.
Corpus from Rs 200 daily SIP investment in 20 years
The total investment in 20 years will be Rs 14,40,000, estimated capital gains will be Rs 45,54,888, and the estimated corpus will be Rs 59,94,888.
Corpus from Rs 6,000 monthly SIP investment in 30 years
The total investment in 10 years will be Rs 21,60,000, estimated capital gains will be Rs 1,90,19,483, and the estimated corpus will be Rs 2,11,79,483.
Why is there a difference in investment??
As far as the daily SIP is concerned, the SIP calculator is calculating at 365 days a year irrespective of a leap year.
Why is there a difference in investment??
On the other hand, in a monthly SIP investment, the calculator is calculating at 30 days a month.
A 5-day difference means a 150-day difference, or 5 months, in 30 years.