Producer: Priyanka Das Editor: Nisha Dubey

5 Mistakes to Avoid When Doing Mutual Fund SIP

Not Having A Clear Financial Goal

What are you saving for? Retirement, child’s education, or a down payment on a house? Knowing your goal will help you choose the right SIP plan and investment horizon.

Neglecting Research

One of the most significant mistakes investors make is jumping into SIPs without conducting adequate research. Before investing, thoroughly research the mutual funds or investment avenues available, considering factors such as past performance, fund manager expertise, expense ratios, and investment objectives.

Ignoring Risk Tolerance

Each investor has a unique risk tolerance level based on their financial goals, investment horizon, and personal circumstances. Ignoring your risk tolerance and investing in SIPs with high volatility could lead to panic selling during market downturns, jeopardising long-term returns.

Timing the Market

Attempting to time the market by starting or stopping SIPs based on short-term market movements can be detrimental. SIPs are designed for long-term wealth creation, and trying to predict market highs and lows often leads to missed opportunities or unnecessary losses.

Overlooking Diversification & Not Reviewing Investments

Concentrating investments in a single asset class or fund exposes investors to higher risks. Diversifying SIP investments across various asset classes, sectors, and fund categories can help mitigate risks and enhance overall portfolio stability.