What to avoid during your mutual fund investment journey?Nikita Shetty
Investing in the mutual fund market is one of the most lucrative options indeed. But, since this market has high volatility, every person must know about the mistakes, which can significantly cost them their investment plans. To make you more aware, here we have discussed some of the mistakes that most investors commit while dealing with the mutual fund investment.
Not thinking rationally about the investments
Most people trust their guts and avoid efforts that will need to be done to assess the investment plans practically. This is where they make the mistakes because even sometimes, your gut feeling can be wrong. The mutual fund market is highly unstable and volatile. This is why if you are making the decisions based on what your heart is telling you, you will land up in jeopardy, and that’s for sure.
Stopping the SIPs the moment the market falls
Since the mutual fund market is not stable and highly dependent on the other trade markets, the fund prices are subjected to movements. If somehow, at some point, the price falls below your expectation limit, your first reaction will be to close the SIP and settle the investment. Even though for some people this might be a profitable decision, most times it will cause you to lose some lucrative opportunities. This is why do not the SIP at once the moment you find the market falling.
Not caring about the risks
Several risks are associated with the SIP plans, and hence if you are not considering those, you will definitely suffer huge losses. This is why you need to ensure that you have enough knowledge about how the risks will affect your investment plans and then make strategies to diversify or mitigate the risks.
Panic selling during market falls
Another major mistake that most investors make while dealing with mutual funds is panic selling. The moment they notice the prices have started to drop, they don’t think of the future price movements and immediately sell the funds. By doing so, they lessen their exposure to the market and hence miss out on the opportunities during the price increase.
Holding too many investments under one name
Even though multiple investment plans will help you to diversify the risks, it is a hectic job to manage different accounts. Moreover, keeping track of all the investments and switching between them is not a feasible option. So, it will be much better if you choose a couple of investments only with proper plans.
Always depending on trading strategies
Sometimes, it is better to use trading strategies, but that doesn’t mean these strategies should be the ultimate solution. If you rely on them completely without analyzing the market on your own, you will suffer a lot and miss the opportunities.
No matter what SIP plans or mutual fund plans you are planning to invest in, your duty will be to evaluate the same properly to know the risks, assess the price movement, and so on.