There’s daily SIP too

Most investors are familiar with only monthly SIPs (Systematic Investment Plans). However, mutual fund houses offer SIPs of disparate frequencies — weekly, monthly, quarterly, semi-annual, and even daily investment.

Daily SIPs offer a strategic approach to mutual fund investments. Unlike the traditional monthly SIPs, these require investing a specific amount on each business day. This method allows investors to align their investments with their financial goals, fostering a disciplined approach to long-term wealth creation.

The daily option in SIP primarily appeals to those investors who earn daily or have irregular cash flows. They would otherwise invest a portion of this with unorganised private financiers, including chit funds, which are highly risky, or let the money remain idle in their bank accounts.

Daily mutual fund investment

• A daily Systematic Investment Plan is one of the methods of investing in mutual funds that involves making regular contributions on a daily basis.
• Allows investors to build wealth over time by investing a set amount of money consistently.
• It’s particularly beneficial for those with a steady income who wish to align their investment strategy with their financial objectives.
• By committing to a daily SIP, investors can take advantage of the power of compounding and potentially achieve their long-term financial goals through disciplined, small and frequent investments.

As 70 per cent of India is self-employed, this innovative feature is designed to cater to the unique financial needs of non-salaried individuals, such as daily-wagers, business owners, shopkeepers, retailers, and even professionals like doctors and freelancers.

Daily SIPs have been made available through traditional offline channels by AMCs (Asset Management Companies). However, this financial option is not popular as compared to monthly SIPs.

“Most investment platforms primarily offer monthly SIPs. Daily SIPs are not as popular because these may not be widely available,” says Rajeev Kathuria, a mutual fund distributor based out of Chandigarh.

According to estimates, the share of the daily investment plan option in the total SIP contribution is around 0.1 per cent. In the current fiscal year (FY25), till June 2024, the industry received total SIP inflows of ~62,535 crore. The average per month of SIP flows has grown by 60 per cent from ~13,000 crore per month in FY23 to ~20,845 crore per month in FY25 (April-June).

At present, 11-12 AMCs offer daily SIPs. Some of the mutual funds that offer daily SIPs are SBI Contra Regular Plan Growth, Axis Midcap Fund, HDFC Small Cap Fund, Quant Small Cap Fund, ICICI Prudential Mutual Fund, Tata Mutual Fund and HDFC Mid-Cap Opportunities Fund.

“Daily SIP is particularly beneficial for those whose income fluctuates and does not follow a monthly salary structure. Its feature allows investors to contribute as little as ~100 to the amount of choice on a daily basis, making it an accessible and flexible investment option,” says Manish Kothari, co-founder and CEO, ZFunds, a mutual fund distribution start-up.

He claims that ZFunds was the first mutual fund platform to bring investment in daily SIPs through the online mode in 2022. ZFunds currently facilitates a total of 5,000 daily SIPs on its platform.

The Offtake

The industry has witnessed a healthy mix of participation from both metro and non-metro areas. “Individuals from non-metro regions are increasingly opting for the more regulated daily SIPs over chit funds. In metro cities, professionals such as doctors, businessmen and freelancers are also showing a preference for investing through this format,” according to ZFunds. Investors who are willing to save daily also prefer these over monthly SIPs.

However, one should invest in SIPs with a long-term view. With the increasing shift from cash transactions to digital payments, such as UPI, this new feature aligns with the growing trend of digital money management.

Industry experts say the future of daily SIPs looks promising, especially with the growing trend of people moving towards the gig economy, freelancing and earning on a project or on a daily basis.

“We anticipate that daily SIPs will constitute 15-20 per cent of the overall SIP industry within the coming few years,” says Kothari. This format, he adds, is “more inclusive and aligns well with the evolving income patterns of individuals”.