Consistency, Perseverance and Patience are the three main objectives of investing in mutual funds – growing money through SIP. Systematic Investment Plan – Investing small amounts on a regular basis i.e. every week or every month. Instead of investing a lump-sum amount one can opt for SIP as another way of investing their amount and build wealth gradually
Most people think mutual fund investment is one-time activity which is a wrong notion. Usually mutual fund investment (SIP) are made with a long term purpose in mind.
In most cases, investors choose fund on the basis of risk profile, returns and tenure requirement. Investors have to assess the details, else there is a great chance of losing the capital invested into market.
Mistakes that the investors should avoid while doing a SIP
- Investing high amount: Investors will be excited by the benefits of SIP, by this they invest high amount without calculating their present and future financial stability. Evaluate your financial position then invest in a realistic manner.
- Short Term investment plan: The returns or wealth creation of your investments depends on the time period of your investment, the longer you stay invested higher will be the returns generated as it benefits from the compounding effect.
- Stopping investment when the market falls: When markets get volatile, investors tends to discontinue their SIP when the market falls. Market situation shouldn’t be a detriment for your SIP investment because the investment is spread over a period of time and the price changes are balanced or neutralize.When the market falls down, than there is chance of getting more SIP units at low price.
- Invest and forget: In most case investors, invest into SIP and forget to stay updated and to renew it. When invested into SIP, investors must always keep a watch on their investments regularly and evaluate the portfolio frequently and replace the non-performing mutual funds with the better performers.
- Only for small investors: It is a myth associated with SIP that investors who cannot afford to invest in a lump-sum manner opt SIP. If a person can invest a larger sum on a monthly basis he can still go for an SIP. Anyone can
Your hard- earned money should follow right path of investing, grow gradually and systematically. By avoiding these mistakes you become a smart investors and right in handling the SIP.