3 Mistakes to Avoid in SIP Investments

Mutual fund systematic investment plan (SIP) has become the ‘sure-shot’ answer to all investment needs, thanks to flourishing stock markets and dull performance of other asset classes such as bonds, gold and real estate. Many think that by signing up for an SIP in an equity mutual fund scheme, they will save money to achieve their financial goals. While the success stories want you to believe it, here are three scenarios wherein one may fail to achieve his financial goal even if he opts for an SIP in equity mutual funds.

Investing too small amount

Many investors want to go for SIP, but find it difficult to invest ‘large’ enough sum each month. Especially the first timers want to taste the waters with an SIP of Rs 1000 per month. Nothing wrong in that. Even Warren Buffett has warned us against testing the depth of waters with both feet.

Picking wrong schemes

A lot of experts have written about picking the right schemes. However, there are still many who land in trouble when they pick their horses. Many a time, investors end up picking schemes based on their recent performance or bet on some sectoral fund without understanding the risk-reward involved.

 Investing for very short time periods

Most of the times, investors are seen at two ends. Either they use some ‘investment apps’ on their mobile phone and sign in for a perpetual SIP or they end up signing for the minimum six months to 12 months SIP. If you have signed for a perpetual SIP, you are supposed to review the performance at least once a year.