Which is better - monthly SIP or weekly SIP?


Since SIPs lead to cost averaging of your investments, sometimes we get the question that will weekly SIPs lead to better results?

Recently I came across a blog post on Advisorkhoj that addresses the same question with some historical data analysis.

The author tests the following three scenarios:

  • Monthly SIP - Rs 10,000 is invested monthly in Nifty 50 on the first (business) day of the month.
  • Fortnightly SIP - Rs 5000 is invested monthly in Nifty 50 on the first day of the month. Another 5,000 is invested monthly on the 15th of the month.
  • Weekly SIP - Rs 2500 is invested on the 1st, 8th, 15th and 22nd of each month.

Total monthly investment in all cases is Rs 10,000.

The SIPs start on 1st November 2008 and end on 1st November 2018 - after 10 years.

Here are the results for monthly, fortnightly and weekly SIP in Nifty 50:
SIP-Across-Multiple-Dates-Nifty50

The same analysis but instead of Nifty 50, the investments are done in BSE Midcap:
Monthly-Weekly-SIPs-Midcap
Source: Advisorkhoj

As you can see, there is not much difference between monthly, fortnightly or weekly SIPs. All of them give similar returns.

A weekly SIP may average out the cost better, but a better average is still an average only. It will not necessarily be higher or lower than a monthly average and for a long enough duration, both should converge to roughly the same number.

A monthly SIP at the beginning of the month keeps it simple while also having the behavioural benefit that your investments are made soon after your salary gets credited and then whatever is left can be spent without any worry.

As Warren Buffet says - Save first, spend later.