Kotak Mutual Fund has joined a host of AMCs in embracing the concept of ‘Any Day SIP.’ This facility allows investors to start a SIP on a day of their choice rather than a date offered by the AMC. Previously AMCs allowed investors to set up SIPs on any one of a series of dates, usually the 5th, 10th, 15th, 20th and 25th of the month. Any day SIP has already been introduced by AMCs such as Motilal Oswal Mutual Fund and Aditya Birla Sun Life Mutual Fund. However some major AMCs like HDFC Mutual Fund are yet to introduce it.
What is a SIP?
A Systematic Investment Plan or SIP invests a fixed amount in a mutual fund every month. It averages out an investors’ purchase price and gets him more fund units if the market falls over time. It thus reduces an investor’s risk. We explain this effect in detail, here.
How to set up a SIP?
You can set up a SIP by filling up a SIP investment form of the chosen AMC and submitting a physical bank mandate. You have to specify the SIP date on the form. On several online platforms, you can also complete this whole process electronically. Bank mandates can be given using debit cards or net banking.
Does ‘Any Day SIP’ matter?
From the point of view of returns, the answer is no. There is no statistical evidence to support higher returns if you do your SIP on any particular day of the month. However investors may wish to select particular dates for reasons for convenience. If an investor has his salary credited on the last day of each month, he may want the 2nd or 3rd day of the next month as his SIP date rather than the 5th. If an investor receives rent on the 10th of each month, he may want the 12th or 13th as his SIP debit date rather than the 15th. Some investors may believe in particular dates for astrological or numerological reasons and may want to tailor their SIPs to those dates.
Points to note
To avoid complications with dates such as the 30th and 31st (since February has only 28 days on non-leap years), mutual funds are permitting SIPs on any day from the 1st to the 28th of the month. If the date chosen falls on a non-business day, the SIP is debited on the next business day.