Stop doing this, it will lose you money? 3 SIP warning alerts

A lot of investors take the smart step of starting Systematic Investment Plans (SIPs) in equity mutual funds. It’s a journey well begun. An SIP is designed for one purpose, which is to make it easier as well as affordable for people to invest in MFs. But many investors stop their SIPs after a while.

1. Losing money in falling market
The stock market will see frequent ups and downs. This is market volatility and can be scary. In general, the market goes up over the long run and so do shares of most “good” companies. Mutual Funds invest money in good quality stocks. Therefore, in the long run, equity MFs have done well and have enriched many who stuck with their SIPs.

2. Waiting for high market to cool
When it comes to equity investing, a market high is seen as too much of a good news. With warnings from market commentators that a “market correction “ is due, many investors believe they should stop SIPs and start investing again when the market has finished “correcting”. This is a case of attempting to time the market. The fact is that the market can go up even further. The idea behind a SIP is to stay invested, through ups or downs and allow equity to do its job by helping you stick to a time line that works best for equity.

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3. Need money for buying home
Buying a house is a big personal milestone for most families. We often stretch beyond our budget and the Equated Monthly Installment ends up being a big chunk of our salaries. Who, then, has money for a SIP? Just as your home is non-negotiable, so is your retirement. You will only have your investments to live on, once you retire.

By: Sanjiv Singhal
(The writer is founder & COO, Scripbox)

Source: DNA Money