According to a study, it has been found that youth investors who are in the nascent stage of their careers are more attracted to it. The question is why is it so?
Well, this is because Mutual fund SIP provides small monthly investments for a longer tenure. Sadly, many investors due to lack of knowledge end up making some mistakes and this can prevent them from making big money-
1. Discontinuing SIP
Making consistent SIP Investments is considered a healthy habit. But many of us don’t like to stay fit! Eventually, being fit is the only solution to living a long and healthy life.
Just like this being consistent in paying your monthly SIPs will eventually let you live a healthy financial life. Skipping SIPs does have adverse impacts, let’s understand this with an antinode.
2. Not increasing SIP with increasing Salary
The majority of investors stick to the same particular SIP amount for the whole tenure. This is a big mistake as investors don’t increase the amount when their income increases every year. They remain consistent with the same amount only. One should focus on increasing at least 10% or more, in their SIPs.
For instance, you are investing a sum of Rs 5,000 every month in an equity SIP. This investment is made for 15 years and the return of it is somewhat around 12%.
Your estimated surplus would be around Rs 26 lakh by the end of 15 years.
But if you had increased your SIP amount by only 5% yearly, this 26lakh would have been Rs 32 lakh. Your monthly SIP would have increased by Rs 250 in the 2nd year, by Rs 262 in the 3rd year, and so on.
Increase your SIP amount gradually, so that it doesn’t come out as a burden to you!
3. Having SIP with no Specific Goals
People generally tend to ignore the upcoming financial goals of their life. Many youngsters are more focused only on just making money, gaining returns. Thus, they make investments without considering their future financial goals.
Financial goals can be both short-term, which you might want to achieve in a span of few months. Then there are long-term goals that you wish to achieve 10 to 20 years or more. It is very important to link your goals like retirement planning, child education, child wedding, foreign holiday, etc. This way you’ll be able to make crucial investment decisions as to in which schemes you should invest and so on.
As per the psychological fact, it has been seen that goals have been achieved when people invested through SIP. As keeping in mind that they are investing in their goal, led to many fulfilled SIPs.
4. Not monitoring your SIPs periodically
It’s a common mistake that after starting a SIP, there is no monitoring done by the investor. To achieve your financial goals, it is very crucial to review your SIPs in different schemes at least once a year.
With these periodic checks, you’ll be able to understand which mutual funds schemes are reaching your expectations and which underperformed. Seeking guidance from a knowledgeable mutual fund consultant can further enhance your investment strategy, providing valuable insights and personalized advice tailored to your financial goals.
