5 investor mistakes that ruin the game! They prevent SIPs from becoming a 'return machine'...

Mutual fund SIPs are often called "easy and smart investments." But they only prove beneficial if done correctly. Often, investors make some basic mistakes that ruin their entire plan and fail to yield the expected returns from SIPs. If you too want to build long-term wealth through SIPs, it's crucial to avoid these five mistakes.

Mistake 1: Choosing a Fund Without Research
Many people blindly start an SIP in a mutual fund based on the advice of friends and relatives, or after watching videos on social media. However, every investor's age, goals, and risk tolerance are different. A fund that is right for your friend may not be perfect for you. Always consider the fund's past performance, return pattern, and risk level before investing. If you're new to investing, it's best to start with a low-risk option like the Nifty 50 Index Fund.

Second Mistake: Stopping SIPs as soon as the market falls

This mistake is often made by new investors. As soon as the market falls, people panic and stop their SIPs. However, the truth is that a falling market is an opportunity. When the market is down, you earn more units per SIP amount. This means your average cost decreases, and the potential for increased returns increases. Continuing SIPs during downturns is the hallmark of a wise investor.

Third Mistake: Not Having a Long-Term View

SIPs are not a lottery that will make you rich overnight. They are a disciplined, long-term strategy. The true impact of compounding is only visible when you let your investments run for 5 to 10 years. Many investors withdraw their funds after 2-3 years if they don't see good returns, but this is the time to be patient. The longer you continue your SIP, the better you will benefit from compounding and the larger your corpus will be.

Fourth Mistake: Never Increasing Your SIP Amount
If your salary is increasing, but your SIP has remained the same for years, you're making a big mistake. Try increasing your SIP amount by 10% every year. This is called a Step-up SIP. This can multiply your final corpus. For example, if you started a SIP with ₹5,000 10 years ago and continued increasing it by 10% every year, it would yield exponential benefits. This is a small but very effective step.

Fifth Mistake: Not Reviewing Your Portfolio
Many people don't check their SIP for years after starting it. However, both the market and funds keep changing. Therefore, it's important to review your portfolio every six months or once a year. Is it lagging behind other funds in its category? If a fund is consistently underperforming, don't be afraid to change it. Staying active in your SIP is a sign of smart investing.

Understand why increasing your SIP during a downturn is wise.
If the market has fallen significantly and you have extra funds, increasing your SIP amount or investing a lump sum can be very beneficial. This is called averaging. Receiving more units during a downturn improves your returns. Taking advantage of such market conditions instead of panicking is a sign of a wise investor.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.