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Which date(s) is/are best for SIP in a month?
There's no such thing. It's rare for markets to move up / down so much in a single month, that a single SIP instalment being on a different date would make a sizeable difference in your long term.
There's no such thing.
It's rare for markets to move up / down so much in a single month, that a single SIP instalment being on a different date would make a sizeable difference in your long term corpus.
If you start investing today via SIP, and analyse 10 years later, you'd find that, say for example, 23rd of the month was the best day to invest for your funds. That's something you can know only if you know the NAV history of next 10 years, which no one does.
What about the apps that show you best date of SIP?
These platforms or services are showing you, the "best" date, to prevent an analysis-paralysis. It's "one less thing to worry about", therefore prompting it to the user would mean higher conversion rate (assuming this is a metric these platforms are measuring - how many people complete setting up their SIPs).
This is good for the platform, as it's helping the user feel psychologically safe that they're able to see some analysis, no matter how useless it is.
However, the only thing they've done is take past NAV data, and found out what has been best date of SIP for a particular fund over a period.
Since past performance is not indicative of future performance, anything derived from past performance is also not indicative of same metric for future.
If between 2001-2010, 5th of the month had been best for a particular fund, say SBI Bluechip (not a recommendation, just using as an example) - that does NOT mean for next 10 years (2011-2020) same exact date was best for the same fund.
For instance, some people believe that the last Thursday of the month coinciding with options expiry date, can be best for investment. This is obviously not backed by any sound analysis.
What does a sound analysis here look like?
You might find articles on the internet that draws some conclusions.
Take the 2010-2020 period. It's a 10 year period, with 120 months. That's 120 transactions. Assuming each month to be of 28 days (to account for February); this would require comparing across 28 time-series data sets, with each having 120 entries; for every fund.
But that's not all! Imagine someone investing on 28th of a month, instead of 1st of a month after salary credit (assume this person gets paid by employer on last day of previous month). Then these 28 days, this amount has been parked in savings account or overnight fund or even short term FD.
A proper analysis on best date for SIP would also have to involve the interest income from this and tax paid on these gains, which again, have varied greatly over any meaningful period.
As you can see, there are too many variables; and that's just with one single fund. India has more than a two thousand mutual funds, as of now.
Finally, consider that people don't invest the same amount via SIP over a ten year period. Some people increase the amount of SIP that they do every year as their salary increases. Some of them pause their SIPs from time to time, or skip a few installments here and there.
To sum it all up; there might be a best date for SIP in a month, and it depends on lot of factors that one cannot easily simulate with past data. But even if they did and found one, that date might not be best for your investment pattern for next 1-2 decades.
Invest on a date of month you're comfortable with.
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