Systematic Investment Plan (SIP) is a facility offered by mutual funds where in investors can invest in MF schemes on a fortnightly, monthly, quarterly or annual basis. SIP not only avoids timing the market but facilitates wealth creation journey in a disciplined manner in the long run. But many at times investors end up making mistakes that could lead them to losses or miscalculating the SIP amount or the target amount. Here are five key SIP mistakes investors should avoid:
1. Know yourself to know your SIP amount better
Quite often, many investors choose to commit a huge amount for SIP without realising their current financial status, this could lead the investor either to drop out from the commitment in midway or lose interest in investing further or in future. Similarly, committing a smaller SIP amount could be insufficient to reach the target amount. The ideal way to commit an SIP amount is to evaluate your current financial status, risk profile and the goal for which you are investing so that your SIP does not pose a financial burden.