SIP Investment: Most people find the method of investing in mutual fund SIP easy and with huge profits. Millions of people dream of making big savings for the future by investing small amounts every month. But in the last one year, many investors have not received returns as per expectations.
According to Mint report, many people wrote on social media that despite doing SIP for 12 to 15 months, there was no significant growth in their portfolio or the returns came negative. In fact, continuous fluctuations are being seen in the stock market since 2024. The market environment remains unstable due to trade war, tax and geopolitical tensions at the global level. This has also affected mutual funds. In the last one year, about 60 equity funds have given negative returns, while the remaining funds have also shown a growth of barely 1%. This is the reason why investors are disappointed. In such a situation, the question in the minds of investors is that where is the mistake happening and what should be done next.
Always look at SIP from a long term perspective
But the thing to note is that the real benefit of SIP comes in the long run. It would be wrong to call a fund bad after looking at its performance for one or two years. For example, Tata Small Cap Fund gave -4% returns last year, but it gave 21% annual returns in three years and 31% in five years. Similarly, Shriram Flexi Cap Fund also showed negative returns in one year, but in the long term it has given annual returns of 13% to 16%. The same thing applies to HDFC Nifty200 Momentum ETF and Kotak Small Cap Fund. Therefore SIP should always be viewed from a long term perspective.
If your fund has been performing poorly for some time then it is not necessary to change the fund immediately. But if a huge difference persists for a long time, it is better to take the advice of a financial advisor.
Diversification is also important
Also remember that diversification i.e. dividing the investment among different funds is important, but spreading money among too many funds can be harmful. It is better to do regular SIP in 4 to 5 good funds.
Don’t panic and stop SIP
Many times investors get nervous when the market falls and stop SIP. But this is the biggest mistake. The advantage of SIP is that when the market goes down, you get more units at a lower price. Later, when the market improves, more profits are made from these units. If you stop SIP midway, this benefit will be lost.
It is very important to understand your risk capacity before investing. If you can take higher risk, then Equity SIP is the right option for long term (minimum 5 years). Whereas if you are a medium risk investor, then you should create a balanced portfolio which has the right mix of equity, debt and hybrid funds. This will reduce fluctuations and returns will remain stable.
