SIP Tips: What to do in case of loss in mutual fund SIP? Problems can be solved by paying attention to these 7 things..

Experts often advise those who invest in Mutual Funds to invest through a Systematic Investment Plan (SIP). Apart from the convenience of regular investment of small amounts, cost averaging is a big reason for this. But sometimes investing through SIP also leads to losses. This happens because no matter what the method is if you invest in equity mutual funds, your money ultimately goes to the stock market where fluctuations are common.

SIP may incur losses when the market falls, but this does not mean that you should stop investing out of panic. Here we are going to tell you some such things, by paying attention to which you can recover from the loss in SIP and continue investing in the right direction.

Do not give up patience.

Patience is the most important quality in investing. Fluctuations in the stock market are natural and a short-term fall does not mean that you should stop investing for fear of loss.

Think for the long term while investing in equity mutual funds. There is often instability in the market in the short term but there is a high possibility of better returns in the long term. Therefore, it is better to continue SIP and wait for the market trend.

Avoid hasty selling

Often investors start selling their mutual fund units when the market falls. But this is not the right strategy. The biggest feature of SIP is that it gives the benefit of rupee cost averaging.

When the market is down, you can buy more units at a lower price. This will give you the benefit of the possible rise in the market in the future. If you sell the units in a hurry, you may be deprived of this benefit.

Review the performance of your fund.

If your mutual fund is giving negative returns, then instead of panicking, compare it with other funds of the same category. If the performance of your fund is slightly less than other funds, then it may be okay to continue it.

But if your fund is performing very poorly, then you can consider switching to another fund after consulting an expert.

Review the performance of your fund.

If your mutual fund is giving negative returns, then instead of panicking, compare it with other funds of the same category. If the performance of your fund is slightly less than other funds, then it may be okay to continue with it. But if your fund is performing very poorly, then you can consider switching to another fund after consulting an expert.

Identify the market trend.

It is very important to identify the market trend in mutual fund investment. If there is a bull trend in the market, then the value of your fund is likely to increase. On the other hand, if the bear trend continues, the market may fall further.

But this does not mean that you should stop investing. Those who invest through SIP should keep investing in both trends, which give better average returns in the long term.

Diversify the portfolio

Diversification is very important for successful investment. If you have invested all your money in a single fund, then the risk may be high. It would be better if you include multi-cap, flexi-cap, and debt funds in your portfolio. This will reduce the impact of poor performance of one asset class on the other when the market falls.

Research about sectors and stocks

Before investing in any fund, do thorough research about the portfolio of that fund and the sector associated with it. Keep in mind the growth and long-term potential of the companies included in the fund. Apart from this, analyze the expense ratio, past performance, and outlook of the fund. If you find any shortcomings in the fund, consult your financial advisor.

Review investments regularly

After starting investing in SIP, it is also important to review it from time to time. If there is any change in your goal, market conditions, and performance of the fund, then you should change your investment strategy. Leaving the investment for a long time without review can affect your returns.

Some more tips to avoid losses in SIP

Target investment for the long term: Investment through SIP always gives better returns in the long term. This also gives you time to deal with market volatility.

Invest in different funds: Do not invest all the money in a single fund. Investing in different funds reduces the risk.

Pay attention to the expense ratio: A high expense ratio can reduce your returns, so do check it.

Consult a financial advisor: It is always good to consult an expert before starting investing.