People invest in the stock market through SIP path because it has been praised a lot by the investment gurus.
It is said that a systematic investment over a prolonged period absorbs the jerks of market corrections and end up with a good return.
However, at times, the results are utter disappointing, and the returns are far less than projected.
Indeed, it is a devastating situation for an investor who drew an entirely different picture.
Why does such a thing happen? Why do mutual funds fail to fulfill the expectations of investors?
Well, there is always something wrong with the strategy.
The problem is not the 'what' part, it is the 'how' part that has problems. Here are a few prominent reasons your mutual fund investment does awful.
Investing in a balanced fund
It is the most committed mistake in the mutual fund investment. It is said that these funds offer the safety of debt and the power of equity.
However, they are not right from the wealth creation perspective. Investors get attracted to the monthly dividend option, but it gives returns only when the market is going up. In bearish markets, the gains are unpredictable.
Starting new SIP with a short-term goal when the market is soaring high
It is also a common mistake. There is no point in starting a fresh SIP for a short horizon with the intention of booking profit.
Mutual fund investment is a long-term game always. The funds you buy at a sky-high rate will not give good returns. Still, many people do it.
Stopping SIP when the market is bearish
Again, it is a bizarre decision. It loses the very purpose of systematic investment. One must stay invested when the market is diving deep.
When the market is low, you accumulate more units which will give substantial benefit during the bullish times.
Relying more on small or midcap funds
Have you been investing in small or midcap funds only? If yes, then remember thataggressive investment in these funds is not good as far as long-term results are concerned.
Even if it has the potential of giving high returns, the volatility is also equally high. These funds are vulnerable when the market falls.
To avoid these mistakes, always invest in the market according to the suggestions of a qualified wealth manager. In Iplan Financial advisor's knows the ins and outs of the market. Iplan Financial advisor's access to all sources of information to evaluate a fund. Therefore, the risk is minimized.