Does having SIP date make any difference to the long-term wealth creation?

Systematic Investment Plans (SIPs) have become a popular method for individuals to invest in mutual funds, offering a disciplined approach to wealth creation over time. One common question among investors is whether the date of initiating a SIP affects long-term wealth creation. We will explore the impact of the SIP date on long-term investment outcomes and discuss strategies to maximise returns.

 

Understanding SIPs

 

SIPs allow investors to invest a fixed amount of money at regular intervals, typically monthly, into mutual funds. The power of compounding is a key benefit in SIP, as returns on investments generate additional earnings over time, leading to exponential growth.

 

 

Experts suggest rather than chasing the perfect entry point, investors should focus on staying invested, increasing contributions over time, and sticking to their financial goals. The power of compounding works best when investments are left undisturbed over long periods.

 

“Our study of SIPs over the past 27+ years shows that the date of investment has no meaningful impact on long-term returns. Whether one invests at the beginning, middle, or end of the month, the difference in XIRR remains negligible. The returns range between 13.55 per cent and 13.62 per cent, indicating that the difference is only 0.07 per cent. Spending more time in the market is more important than timing the market. Many investors try to optimise SIP dates, believing it will enhance returns. However, markets are unpredictable, and any short-term volatility is insignificant over a long-term horizon,” said Chethan Shenoy, director & head - Product & Research, Anand Rathi Wealth Limited.

 

“The date of your Systematic Investment Plan (SIP) matters less than the discipline of consistent investing over the long term. Markets fluctuate daily, but over years or decades, these short-term variations tend to even out,” said Sarvjeet Singh Virk, co-founder & MD, Shoonya by Finvasia.

 

“For instance, over the last 20 years (2004–2024), the Nifty 50 TRI has delivered an annualised return of about 15 per cent despite multiple market corrections. Even those who started SIPs at market peaks saw strong long-term gains. Similarly, a monthly SIP of Rs 10,000 in the Nifty 50 over the last 10 years would have grown to over Rs 27 lakh, highlighting the power of disciplined investing,” Virk said.

 

“Studies suggest that SIPs executed at the start or end of the month may show marginal differences in returns due to market trends. However, these differences are often negligible over 10–20 years. To ensure efficient and disciplined financial planning, it is wise to set your SIP date close to your salary credit date. The key is consistency, investing regularly and increasing your SIP as your income grows. So, instead of chasing the ‘best’ SIP date, focus on starting early, staying invested, and maintaining discipline,” said Virk.