Systematic Investment Plans (SIPs) have emerged as a popular investment tool for individuals looking to enter the stock market gradually while mitigating risks associated with market volatility. With the Sensex being one of the key benchmarks in India, investors often seek insights into the most favourable dates for initiating their SIPs to maximise returns over the long term.
A comprehensive analysis of SIP returns at various dates over different durations in the Sensex from September 1996 to December 2023 sheds light on this intriguing question.
The table below presents the average SIP Compound Annual Growth Rate (CAGR) at different Dates over various durations in Sensex, from September 1996 till December 2023 (27.35 Yrs).
|
SIP Dates |
5 Yrs | 10 Yrs | 15 Yrs |
20 Yrs |
| 1st |
15.14% |
15.66% | 14.27% |
14.63% |
| 5th |
15.15% |
15.64% | 14.24% |
14.61% |
| 10th |
15.09% |
15.61% | 14.24% |
14.61% |
| 15th |
15.17% |
15.67% | 14.28% |
14.64% |
| 20th |
15.17% |
15.68% | 14.29% |
14.65% |
| 25th |
15.22% |
15.69% | 14.29% |
14.65% |
| Mth End |
15.67% |
15.42% | 14.22% |
14.66% |
Analysing the outcome
The analysis reveals that while there are slight variations in the average SIP CAGR depending on the chosen SIP date, the overall impact on returns over the long term is minimal. For instance, the difference in CAGR between choosing the 1st and the 25th SIP date over 27 years is only 0.02%, indicating that the choice of SIP date alone does not significantly influence returns.
However, it’s essential to recognise that the success of SIP investments relies more on other factors such as consistency, discipline, and a long-term investment horizon. Regardless of the chosen SIP date, investors who consistently contribute to their SIPs, stay invested during market downturns, and commit to a long-term investment strategy are likely to achieve favourable returns.
Use SIP Calculator to calculate your Mutual Funds return
Therefore, rather than obsessing over finding the “ideal” SIP date for maximizing returns, investors should focus on developing a disciplined approach to SIP investing. By regularly investing a fixed amount regardless of market conditions and staying invested for the long haul, investors can harness the power of compounding and potentially achieve their financial goals.
Know: Good frequency for SIPs – Daily, Weekly or Monthly?
Conclusion
While the choice of SIP date may have some marginal impact on returns, the key to success in SIP investing lies in consistency, discipline, and a long-term perspective. By adhering to these principles, investors can navigate market fluctuations and strive for optimal returns over time.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.
