7 Mistakes One Should Avoid While Selecting The Best SIP Plan In Mutual Fund

Best SIP Plan in Mutual Fund | Image Resource: freepik.com 

While investing in mutual fund scheme via SIP, there are a lot of mistakes that investors make and usually are not aware of them. Here are common mistakes that one should avoid when they look for a SIP plan.

Investors usually check the following three aspects while looking for the best SIP plan in mutual fund investment namely:

• High returns
• Risk factor 
• Tenure

While these factors are totally essential to be checked before investment there are also other factors that need to be considered to avoid loss of capital due to due to market fluctuations. Following are the seven mistakes an investor makes while selecting the best SIP plan in mutual fund investment.

1. Selecting the wrong mutual fund scheme
Before making an investment one needs to define their financial goal, risk appetite. Make sure you carry out thorough research on different mutual fund schemes available in the market before you choose the right one. For instance, you select a wrong scheme for a long tenure of investment you might face major capital loss and destroy your portfolio.

2. Making a higher investment
Since SIP’s are flexible make sure you study your financial situation and choose an amount which you can easily invest throughout the tenure. Make sure you start with a small amount as the best SIP plan in mutual fund investment allows small amount investments.

3. It is not a small investor’s thing
One myth that is highly associated with SIP is that it is only a small investor’s thing. This is totally wrong.

4. Short term investment
This is another misconception regarding SIP investment. Instead it is advisable to make long term investment to derive maximum returns.

5. Investors set unrealistic goals
One common factor highly associated with a SIP is that the young investors set high financial goals and repent them later. It is advisable to not to expect unexpected returns on your investment, instead aim for moderate returns for longer period of time.

6. Investors Choose dividend over growth
A lot of investors make this mistake, they choose dividend over growth. Study both the factors, you can also choose between both the factors alternatively over time to reach your financial goals.

7. Investors do not boost their SIP
There are often times when you make extra money and it is advisable to make lumpsump addition to your SIP. This boosts your investment at the same time when there is an emergency and you can earn from it.