SIP In Mutual Funds: Don’t Make These Five Mistakes To Avoid Loss

Mutual Funds SIP Investment: Investment in SIP has increased rapidly for some time. Investment is made in mutual funds through SIP. Since it is market-linked, there is no guaranteed return, but most experts believe that the average return in SIP is 12 per cent, which is much higher than the return on any other type of scheme. Due to the benefit of compounding, you can make a good amount of money through SIP in the long run. This is the reason why SIP has become increasingly popular in the last few years.

If you want to create wealth in the stock market, then SIP in mutual funds is considered a good way to invest. Through this, you can take advantage of all the ups and downs of the market and get good returns in the long run. However, some investors make little avoidable mistakes while investing in mutual funds, due to which they are not able to get returns.

If you are also thinking of investing in mutual funds through SIP, then do not make the decision just by looking at the returns. Know some important things before investing, so that you can choose the best SIP for yourself and you never regret your decision in future.

Investment without research

If a person invests without any research, he can suffer loss even through SIP. While investing in any fund one should always compare its past performance, outlook and expense ratio.

Set financial goals

The mistake many investors make while investing in mutual funds is that they do not set their financial goals. Due to this, they are not able to invest as per their need and get less-returns.

Timing the market

A large number of investors make the mistake of timing the market and withdrawing money when the market is close to its highest level. Its effect is that when the market makes a new high, investors do not get the benefit.

Diversity

Diversity is very important for successful investment. For this reason, while investing in mutual funds, emphasis should always be laid on diversity and all three types of funds, small cap, large cap and midcap, should be given place based on their risk profile.

Periodic review

If you are investing in the long term, then you should keep checking the returns of the mutual funds present in your portfolio from time to time. If the mutual fund is giving negative returns or is not performing as per the market, then it is better to exit it after taking all considerations into account.

(Disclaimer: The above article is for information purposes only. Please consult your financial advisor before making any investment decision.)