Avoid These Common Mistakes When Investing in SIP

Personal Finance

Everyone desires a financially stable and opulent lifestyle. For that, a proper monetary plan is necessary. A Systematic Investment Plan is undoubtedly one of the best approaches toward a financial foundation.

SIP is a convenient and straightforward route to generate a respectable amount of revenue. The postulate of this plan is for you to keep investing regularly with proper regulation. In due course, this will lead to the accumulation of wealth systematically. Suppose you want to invest Rs. 6900 per month for six years. With your mutual fund, you can establish a SIP and regulate the contributions in the given period. There is also a choice to increase or decrease the posting frequency. SIP funds generally sanction weekly, monthly, quarterly and semi-annual investments.

However, investors might be occasionally unsuccessful in augmenting their SIP returns because of unfortunate mistakes in the expenditure. We shall discuss the common mistakes made while investing in SIP mutual funds.

Typical Mistakes and How to Avoid them:

For the sake of obtaining the maximum returns through SIP mutual funds, caution is necessary. The slightest of mistakes can hamper the outcome of the investment. The following are the most common mistakes investors should avoid during the process. 

  1. Selecting the incorrect plan for the objective- 

The high returns of some plans often tempt some investors. This leads them to choose schemes that may not fit their goals. This can prove to be quite unfortunate. Soon enough, when the returns inevitably do not meet their needs, they develop a continual market fear and unstable portfolio. To choose the best strategy, consider your unique financial goal, time horizon, and risk tolerance.

  1. Keeping the SIP mutual fund Investment low

SIPs are popular among investors, but relatively few consider raising their investments even when their income and excess rise annually.

You start to make more money as your profession develops. Additionally, as your income rises, your lifestyle also gets better. However, if you merely raise your expenses without raising your savings, it will not benefit you in the long run.

Although you can invest with as little as Rs.500 in most mutual fund plans, sticking with that amount for the required tenure may not be prudent because less SIP amount will not fully fund your intended aim. ‘

  1. Irregular monitoring

Continually check the alignment of your SIP mutual fund investments with your long-term objectives. Your asset allocation might undergo a significant change. If you do not monitor your investments, it’ll be too late to sync with the changes. However, it must be kept in mind not to check them at short periods as it might lead to anxiety.

  1. Investing while having unrealistic goals

Investing in a SIP mutual fund for a goal that cannot be fulfilled within a reasonable period is a typical error made by individuals. The SIP can achieve the aim depending on the income levels to support the plan by setting a good, achievable goal. For example, the investor desires to earn Rs.1.5 crore worth of cash within two years. Although this is possible, one should be able to afford the investment for the objective. Achieving this aim may be challenging if the person’s income is too low and they must use it to support their entire family. 

  1. Prioritizing IDCW (Dividend) Plans over Growth Plans

The marvellous effects of compounding are one of the ways that SIP mutual fund schemes aid investors in building wealth over time. However, if you do not reinvest the returns from the respective scheme, you will not fully benefit from compounding. Investors typically make this mistake when choosing an IDCW plan. This leads them to receive sporadic returns from the mutual fund scheme. As a result, the potency of compounding decreases. The same happens to the chance of maximizing your long-term profits.

Appropriate Measures to be undertaken for avoiding the mistakes

Now that you are well aware of the typical blunders which people make in the process, here are the ways you can avoid them if you decide to invest in a SIP mutual fund in the future:

  1. Set realistic goals as per the required time.
  2. Always choose the Growth Plan when you begin to invest in SIP.
  3. Monitor your SIP over fixed intervals of time.
  4. Invest in schemes that are steady, secure, and possess sufficient liquidity.
  5. Try using a SIP calculator to estimate the outcome and raise an appropriate SIP sum.
  6. Keep your investment time frame flexible to account for market volatility, and maintain patience through increments and decrements in the market.
  7. Increase the SIP amount while progressing in your professional life for more benefits in the long run.
  8. Seek the help of a financial advisor before investing.


SIP mutual funds allow you to build up a scheduled technique so that your fund corpus accumulates consistently over time while ensuring that the total investment is regularized and disciplined. Set up a SIP with any amount you like when you begin investing on any day of your desired month. However, many investors make errors that ultimately work against their long-term benefits. It is crucial to avoid making these errors since they could have a negative influence on your financial planning and future goals. Always practice caution while investing and keep your objectives realistic. For further details, you can visit our website, We will be more than pleased to answer your queries.