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6 SIP Investment Mistakes to avoid to Make Your Money Grow


Systematic Investment Plans for Mutual Funds Investment is one of the most popular investment mechanisms available today, and comes attached with a list of essential characteristics that must never be overlooked. . These particularities, when ignored, can seriously hinder the growth of your investment and financial goals as a whole.

In this article, we will be looking into 6 SIP Investment mistakes ranging from not using a SIP Calculator while making an investment to investing for too short a period, which are the most common mistakes  while investing in Systematic Investment Plans.

SIP Investment Mistakes That You Should Avoid to Help Your Money Grow

1. Not Using a SIP Calculator

Irrespective of which platform you are choosing to conduct your investment, chances are there must be an Investment Calculator available somewhere on the page. The aim of these calculators is to estimate the amount that you will gain on a certain SIP investment after a certain period of time.
 Suppose you are planning to invest in HDFC Mutual Funds now, even though a portfolio with HDFC SIP Plans is reasonably safe as compared to its peers,, a Mutual Funds Calculator would provide an estimate of the expected returns and gains from the HDFC SIP investment.

2. Making Very High Amount of Investment

One of the biggest mistakes that investors make is that they invest a large sum of money in SIPs just by seeing the benefits that the mechanism has to offer. While SIPs seem like a lucrative form of investment, they aren’t risk free. In order to avoid the risk and keep some Fiat money in your account, it is very important that you should invest an amount which comes out as a surplus after you have deducted all your present and foreseen expenses and savings.

3. Stop SIP in a Falling Market

Volatility of the market is one of the reasons why investors take their money out of the SIP. It is a reason that people stop making investments and is a huge mistake. Investors need to understand that unlike shares and your typical form of lump sum Mutual Fund Investments, SIPs investments are made on regular intervals, which nullifies the need to react to the “present” state of the market.

As an investor, you should find a dependable SIP Plan for example Axis SIP Plans and then keep your money invested in it for the longer run.

4. Opting For the Dividend Option

To avail the short term benefits that SIPs have to offer, investors generally opt for the dividend option, which allows them to take out an amount of return after every ‘x’ period of time. Doing this actually lowers the chance of reaping the benefits of Compound growth, which in turn lowers the capability of your SIP Portfolio to gain you money.

The golden rule of SIP investment says that you should invest ‘Rs.x’ in the SIPs without touching the returns before the investment period ends - that is, if you need to gain the full benefit on your investment.

5. Investing for One Year

A number of investors aim to reap maximum benefits of their SIP Plan in the duration of one year. The fact is that no matter what form of investment you are looking at, SIP investment offers Compound growth, the more you increase your investment tenure the higher your returns.

So although it depends entirely upon your financial goals, if your budget allows you to continue with your SIP investment, go in for the long run at least for 3 to 5 years.

6. Not Scrutinizing Your SIP Plan Scheme

The most talked about and yet the most common mistake that an investor makes while making SIP investment is only looking at its present state or rate of return. Now irrespective of what the current state shows, you should base your investment decision after a careful analysis of the SIP Plan’s past and expected future performance.

While there are some safe options like HDFC Mutual Funds or Axis SIP, you should study them in great depth, nonetheless.

With this, we have now come to the end of this pocket listicle enlisting the mistakes that should be avoided when making an SIP investment. While these are just 6 of them, there are a still a number of mistakes which you will have to avoid if you are looking to reap long term benefits.

One solution to keep it all under check is to talk to the Mutual Funds Experts. So, contact our Mutual Funds Experts today!
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