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Here are seven pitfalls to avoid while using Mutual Fund SIPs.
SIP mistakes include not studying mutual funds. Check the fund's investment purpose and management history to pick one that fits your risk tolerance and goals.
A financial strategy prevents haphazard SIP investments and low returns. Before starting an SIP, know your investment goals, time horizon, risk tolerance, and asset allocation.
SIPs started or stopped based on short-term market trends or predictions may backfire. SIPs are for long-term wealth creation. Thus, market timing can cause portfolio volatility.
Neglecting asset allocation & diversification might risk your money. Depending on risk tolerance & investment horizon, SIPs should include equities, bonds, & cash equivalents.
SIP should be examined often, even if past success does not guarantee future results. If a fund often underperforms its benchmark or rivals, reassess your investment strategy.
Review SIPs regularly to avoid missing out on portfolio optimisation opportunities. SIP investments should be checked annually to ensure they align with your financial goals.
Investors might make bad decisions due to panic selling in down markets and overconfidence in bull ones. Stay focused on your investing goal & don't adjust SIPs for market swings.