Being realistic and not losing your track over your financial goals is very important. You will find lots of benefits which come with Systematic Investment Plan. It also allows investors to create wealth by making small investments. Thus, this quality makes it one of the favorite and useful tools of investment for the investors. When it comes to making the actual investment and maintaining it here, we end up making some mistakes which could lead to high losses. Even many people do not know how to start SIP Investment. Thus, have a look at these points through which you will get to what all has to be done and also what you shouldn’t be doing.
Here are some mistakes which you should avoid for your betterment while trying your hands in the SIP investment-
Don’t be in a hurry to start your investment with a higher corpus –
Before investing in any of the investment tools you need to make sure whether it is affordable or not. Many of them choose to invest a considerable amount without giving a second thought of the consequences and of course about their financial situation. Avoid investing all the money in one go and invest it periodically. Investing a small amount helps you to calculate your budget and also helps you in continuing the investment for a more extended period. Remember that your investment should not become a burden for you.
Ignore the misconception that SIP investment is just for small investors –
SIP investment is for those who are unable to invest through the lump sum mode. However, it is not only meant for small investors. If you can invest Rs 30,000 monthly instead of Rs 3000 monthly, you are still eligible to invest in SIPs. The compounding, rupee cost averaging, time value of money are not changed on the factor that how much money you are investing which are the fundamentals of SIP. In all the cases you get the same benefits. SIP investment is open for all the investors.
Avoid investing for a shorter period –
This is a common mistake which investors make. The investment value is decided by the period and not by the invested amount. Longer the period, higher is the value of your investment.
Avoid redeeming the investment in falling markets –
Many people decide to invest their money when there is a rise in markets and redeem the same in the falling market. This is considered a big mistake which an investor needs to avoid. Instead, stay invested either redeem in the rising markets or invest at the time of falling markets. They should take it in a good way and keep continuing to invest when the market is down because when the market is low, they will get the higher number of units as NAV is also low.
SIP is an excellent way to invest in mutual funds as it is convenient, safe, and had fantastic returns. However, people do commit such mistakes and spoil the chances of higher returns. Hence, try avoiding these mistakes to inculcate higher returns.