These Investors don’t invest money in SIP
SIP Investment: Nowadays, Mutual Fund and SIP are the famouse Investment plan. But this investment is not for everyone, said researchers. According to the report, investors should stay away from SIP in some situations.
If you want to withdraw money earlier, or you don’t have patience for withdrawing money, in that situation, a mutual fund is not a good option for you. The real happiness is there, where the SIP investment is longer.
Secondly, there are risk-averse individuals. Mutual funds are linked to the market and are subject to fluctuations. If you panic and withdraw your money every time there’s a market downturn, you will only incur losses. For such investors, fixed deposits or post office schemes might be better options.
Third, people who invest solely to save on taxes. Many people invest in ELSS (Equity Linked Saving Scheme) just to save on taxes. But if your only goal is tax saving and you are not willing to take risks, then SIP is not right for you.
Fourth, those who want immediate returns. The benefits of investing in mutual funds accrue gradually. If you want quick profits, this option is not for you.
Selecting the wrong fund can lead to average returns. If the expense ratio is above 2%, profits decrease. New investors often jump into trending funds. Experts advise consulting a financial advisor or choosing index funds. There is also an exit load if you stop your SIP prematurely.
Experts say that SIPs are for those who have a long-term perspective, want to invest in a disciplined manner, and can withstand market fluctuations. If you don’t meet these criteria, it’s better to choose other safer options.
