Here Are Some Of The SIP Investment Mistakes You Should Avoid


Investors can invest in a mutual fund scheme at regular intervals using a Systematic Investment Plan (SIP). Once the investor completes the registration process, it automates the investing process, as investments are made regularly regardless of market fluctuations.

Retail investors have continued to choose SIP investment due to various SIP perks, as revealed by Association of Mutual Funds in India data on monthly SIP inflows. For more than a year, monthly SIP inflows have been consistently above Rs. 8,000 crores.

Let’s look at five SIP investment blunders to avoid in order and get the most out of your SIP investments.

Redeeming Early/Discontinuing SIP

The market’s activity is unsettling. And, in a panic, we do what everyone else does without knowing what they are doing, even if it’s not essential. The market has always rewarded people who have been patient with their investments. Don’t get caught up in a debate that could jeopardise your investment. If you consider stopping your SIP and abandoning the market, your investment and future ambitions will be harmed.

Rather than stressing over whether or not you should quit, ask yourself, “Do I need money in the near future?” Markets vary all the time, so there’s no need to tinker with your assets if your long-term goal.

Wrong Comparison

Investors are only interested in the amount of return a fund has generated, not whether the funds are all in the same category or what other characteristics the funds have. Comparisons with acceptable peers and benchmarks should be made.

There are various factors to consider other than absolute returns when evaluating mutual funds benefits. The fund’s consistency and stability are also important considerations. You may have noticed a number of mutual funds that promise various benefits in exchange for a small investment.

However, all the funds in a specific category appear to be like that at first glance. SBI Blue Chip and SBI Small Cap Funds, for instance, invest in different pools of shares, so their performance cannot be correlated. In addition to its benchmark, the SBI Bluechip Fund should be matched to other small-cap funds.

Waiting for the right time to invest

One of the most critical investing blunders to avoid is this. Investors that plan to time their SIP investments may be defeating the basic goal of SIP investments, which is to invest across market swings. In most cases, the wait for the right moment lasts an eternity.

Someone once quoted, “The finest time to plant a tree was twenty years ago; the second-best moment is now.” A similar example can be used to describe mutual fund investments. Instead of waiting for the proper time, now is the best time to start SIP investments.

Setting unrealistic investment goals

Typically, to accomplish their objectives quickly, investors establish greater investment targets without considering their income sources, monthly obligations, and other factors.

While stretching financial resources for a few months may be possible, it may cause investors to terminate SIPs considerably sooner than their financial goals are met. As a result, it is always recommended that investors be realistic in their financial goals and intentions should their investment path be disrupted.

Having a high SIP amount

Starting a SIP has no maximum restriction or amount; you can invest more than you want. However, remember that you must stick to the SIP amount throughout the investing period. As a result, examine and decide the amount you can afford before starting the SIP. Use a SIP calculator to figure out your budget and risk tolerance and the appropriate amount for the duration of the investment.

Final Thoughts

Setting up a SIP is a wise investment strategy that simplifies your financial life. It relieves you of the responsibility of deciding when to make each contribution and helps you stick to your pledge to invest in a mutual funds online before spending it.

Having a financial advisor help, you can set up an optimal SIP portfolio which could help you match your goals, risk profile, and time horizon with the mutual fund investments you make. You can also visit this website to get detailed information about financial management and investment.

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