The systematic Investment Plan is ideal for those investors who have a regular flow of money i.e. employees. A simple instruction to the fund house and the bank and that simple mechanism can avoid the risk of volatility of market. When we invest say Rs. 1000 per month, we get fewer units when price is high and gets more units when share price is low. The reinvention of the Systematic Investment Plan has become a boon for investors with a low risk appetite. Rupee cost averaging and compounding are added advantages.
Simply a daily SIP is a plan which collects a small sum from any individual investors on a daily basis and invests this amount in the stock market. It operates like any mutual fund where the disbursement and handling of the money is the fund manager’s prerogative.
Rupee cost averaging occurs when the market goes down, and more units of the scheme can be purchased because of a lower net asset value. However, most companies have SIP schemes that allow you to invest on different dates of the month. Daily SIPs are expected to minimize risk and generate greater risk-adjusted returns while increasing participation.
Daily SIP: Advantages
Affordability, volatility and convenience are the most obvious advantages of investing in a Daily SIP. It captures the daily levels of market volatility. In case of monthly SIP investor can lose if the markets are up on the chosen day of month, while in case of daily SIP, it eliminates this flaw of market and investor get the benefit of volatility of stock market.
If any investor is looking for lump-sum investment, then going with daily SIP would allow him to take advantage of the market volatility, by splitting the lump-sum amount in to daily installments over a relatively short time frame. The daily SIP is ideal for small time savers, since the threshold investment level is low.
Once you start with a Daily SIP, you invest at the appointed time and that makes you a disciplined investor. With Daily SIPs, you capitalize on the periodic dips in the market and accumulate a greater number of units at lower levels–and over time, reduce your average unit cost.
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