Systematic Investment Plan ie SIP is a safe way to start investing in mutual funds. It allows the market to generate money without the need of time. It depends a lot on how you choose the right SIP for your financial goals and how to manage it. People make some mistakes while investing in SIP. Although the causes are different, the most common cause is lack of information. Let us discuss the general mistakes that are necessary to avoid at the time of investment through SIP.
Incorrect investment amount
Most people start with very small investment. It is fine for the beginning. But, after some time, it is advisable to increase the size of your investment to see any remarkable advantage. On the other hand, there are also people who make big investments in the beginning. First of all it is important to be sure about the performance records of the fund. Also, you need to make sure that the size of the investment is such that you can maintain it on a regular basis.
Choosing the wrong fund
Before investing in funds, people are advised to underline their financial goals and determine how much risk they are willing to take. This helps to decide what kind of funds will be good for your needs. If you invest in wrong funds, SIP cannot give you the expected return according to your goals.
Long -term investing
Many investors withdraw their investment when they get good benefits from SIPs. Investors may fail to feel that the value of their SIP also depends on the time period of investment. The actual benefits of HDFC Securities SIP can be obtained only in the long term. Therefore, it is prudent to remain in it for a long time. Investing for long -term is an ideal way to invest in SIP.
Do not increase your investment
Over time, it is prudent to increase your investment amount as you earn more, or are financially weak. Financially high periods such as when you get an evaluation or bonus, you can use additional funds to increase your investment. If you have a lump sum amount, and you have additional funds for a financial emergency, you can use this lump sum amount to increase your monthly SIP as well as your investment.
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