Investors want to make higher returns and that’s why they invest. But investors are human and they do commit mistakes while investing in Mutual Funds. Mistakes are inevitable, regardless of who you are. But the best part is that we can learn from others mistakes so as to not commit the same mistakes. So here are some MF mistakes you can avoid committing. Moneymindz, India’s First Free Online Financial Advisory
1. Commencing SIP for short-term gains
Investors may sometimes think of buying a new SIP just for short-term gains. Experts warn that this method may backfire on you as investing on a sector for short-term is risky. If a SIP is not continued for at least five years, you ant expect returns to be as per your expectations.
2. Stopping SIP owing to low returns
Some investors’ aren’t patient enough to wait while some others are scared of losing money or not getting sufficient returns. Such investors think of stopping their SIPs well in advance. Experts warn against this because this is the time when investors buy more units against their monthly SIP amount, which in future will give bigger returns when the sector starts performing so if you stop your SIP you lose the chance to buy MF at the lower price. Moneymindz, India’s First Free On call Financial Advisory
3. Investing in dividend option of equity mutual fund
When investors invest in equity mutual funds, some of them go for dividend options due to their assumption that they might get regular income in terms of dividend. But by doing so, they are missing the possible compounding opportunity which equity mutual funds offer. Your own money comes back as dividend and you lose the potential future growth on that amount.
4. Investing a lump sum amount inequity MF when markets are at peak
There are some investors who invest a lump sum amount in equity MF schemes with a view that the bull run will continue for some more time and they will be able to make a profit in the short term What they don’t realize is that the bull run may reverse at random times and may not provide opportunities to exit without making profits in the short term. It would be a loss to the investor. So don’t put lump sums in equity funds when markets are at new highs. Kuber Mindz, Smart Financial Advisor
5. Frequently shifting from one fund to another, one place to another
Certain investors have this bad habit of jumping blindly from one fund to another, one place to another. When you blindly jump randomly, you are always at chances of risk and loss of your money. Instead, do your research and invest in what suits your risk profile and financial goals.
Further information can be found at www.moneymindz.com or you can even give a missed call to 022-62116588