In the stock market, most people consider investing in SIP of mutual funds as a good option to create wealth. Everyone from city to village is investing in SIP.
By investing in SIP, you can take advantage of all the fluctuations of the market in the long run and get good returns, but often people make small mistakes while investing in SIP. Let us also tell you what mistakes you should not make while investing in SIP.
Along with investing, also keep in mind your financial condition
While investing in SIP, keep in mind that do not invest a huge amount in one go. This can also spoil your budget. You should decide the amount of investment considering your financial condition. You can easily increase or decrease the investment amount in SIP, so take advantage of this and invest keeping in mind your expenses and financial condition.
Mistake of investing all in one place
Investing all your money in one fund increases the risk of losing your money. You should balance your investments across debt, equity and other asset classes as this can reduce your risk to a great extent. While investing in mutual funds, emphasis should be given to diversification. You should allocate funds based on your risk profile.
Not paying attention to the expense ratio
Before investing in mutual funds, also keep the expense ratio in mind. Often most people make the mistake of thinking that if the return of a fund is 15% or 18% then you will get the same profit by investing, but in reality, this is not the case because the expense ratio comes into play in it. Whatever management expenses your mutual fund incurs is called an expense ratio. The expense ratio of any fund decides how cheap a fund you will get. Whether the expense ratio is high or low also affects your returns.
Not checking the mutual funds in the portfolio
If you are investing for a long time, then check the returns of the mutual funds in your portfolio from time to time. If a mutual fund is giving negative returns or is not performing as per the market, it is better to remove it from your portfolio. Often people do not invest for the long term and this reduces their chances of getting high profits.
Not investing after setting financial goals
The mistake many investors make while investing in mutual funds in a hurry is that they do not decide on their financial goals. Due to this, they are not able to invest as per their need and get less returns. Besides, they also have to take risks many times.
