Major Risks in SIP investment | How to Avoid?
SIP investment (Systemic Investment Plan) comes to mind when you think of investing. SIP helps you to invest in small amounts every month without investing a large sum at once. It is good to invest in this, but know the risks involved in SIP and make the investment. Let’s see what kind of risks are there one by one.
Set Your Financial Goals:
Everyone invests in SIP so don’t invest like I am investing. That means don’t think of investing without setting any kind of financial goal. Because you are investing without knowing what you are investing and multiplying, where exactly will you use that amount.
Understand the Investment Completely:
Maximum everyone will do mutual fund link in SIP. Apart from understanding mutual fund, you need to understand risk wherever you invest. If you want answers to questions like whether you have invested in the right funds and whether the amount you have invested is enough for you, you need to understand SIP and mutual fund.
Diversify your SIP Investments:
Instead of paying 5000 per month in one big lump sum, you will know the difference when you split it and pay 1000 in two or three places. When you invest in one place, if that fund does not perform, the amount you have paid will be wasted. You will get good returns if you invest in small amount in various sectors like mutual fund, stock market, bold, real estate etc.
Never Stop Your SIP:
Never do things like stop SIP when markets are down. It doesn’t matter if the markets are down, the markets can suddenly go up. You should continue your SIP investment without stopping. Remember that if you hold when the markets are down, you are more likely to miss out on big returns.
Be Mindful about the Expense Ratio:
If you are doing SIP investment through mutual funds then you need to know about expense ratio. Expense Ratio is the one time fees you pay for managing your investment. If you invest in a place where you pay more expense ratio, the returns you get will be less. So you should invest where the expense ratio is low.