SIP Investment Myths: Systematic Investment Plan (SIP) in mutual funds has become very popular among Indian investors. Lakhs of people are trying to create a big fund in the long run by investing small amounts every month. This method is definitely easy, but many misconceptions about it also keep circulating in the market.
Some people consider it as a guaranteed return while others dream of great returns ahead of time. Such misconceptions often put investors in trouble. Due to which the long term results are also affected. Let us know about some misconceptions about SIP….
1. It is not certain that you will get high returns immediately from SIP.
Many new investors think that by starting SIP, they will get stable and high returns every year. Even on social media, it is presented as an easy way to get rich quickly, whereas the truth is different from this. SIP is not a shortcut, but it is expected to give better returns in the long run.
The benefit in this comes from time and regular investment. Even SIP cannot do wonders if the performance of the fund is weak. Generally, solid growth is visible only over a long period of time like 7, 10 or 15 years.
2. More funds do not guarantee better returns
There is often a misconception among SIP investors that the more funds are added to the portfolio, the more the returns will increase. Due to this thinking, many people start SIP in 8-10 different funds without understanding it deeply.
But this method is not always beneficial. Holding too many funds makes it difficult to manage the portfolio. It would be wise to choose 3 to 5 strong funds. For which help of experts can also be taken. You should balance your SIP investment according to your goal.
3. Closing SIP is wrong
It is often a misconception among people that SIP should never be stopped or stopped. However, this is not the right thinking. Circumstances keep changing, income may fluctuate. An emergency may arise or your financial goals may also change.
SIP is not a legal obligation. It can be stopped or stopped as per your need. If a fund continues to underperform, it may make sense to switch to a better fund.
Disclaimer: (The information provided here is being given for information only. It is important to mention here that investment in the market is subject to market risks. Always take expert advice before investing money as an investor. ABPLive.com never advises anyone to invest money here.)
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