Top SIP Mistakes To Avoid in 2025~
Investing in the stock market carries certain risks, such as market fluctuations and volatility. Besides conducting thorough research, investors can also seek professional advice before starting a SIP.
In addition, avoid the following mistakes to get better returns:
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Not Having a Clear Financial Goal
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One of the most common mistakes made by investors is not having a clear financial goal.
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Before starting, it's important to know why you are investing and what you want to achieve through SIP investments.
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A clear financial goal will help you select the appropriate SIP plan and stay focused on your investment objectives.
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Whether you are investing for retirement, purchasing a home, or saving for your child's education, having a clear financial goal is essential.
For example, if you are investing for a short-term goal like buying a car, you may want to invest in debt SIP funds. On the other hand, if you are investing for a long-term goal like retirement, equity SIP funds are better suitable as they deliver higher returns over the long term.
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Investing Too Little or Too Much
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The amount invested through SIPs is critical for achieving financial goals.
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Investing too little can result in failure to achieve financial goals.
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On the other hand, investing too much can lead to liquidity issues if monthly expenses and cash flow needs are not considered.
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Small investments may not generate desired returns in the long term.
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Increasing investments later may not be sufficient to make up for small initial investments.
In some cases, investors may be under the impression that they can increase their investments later on. However, this approach may not work in the long term as small investments do not generate significant returns to build a large corpus.
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Not Considering Market Risk
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Every investment carries a certain level of risk, including SIPs. It is important to evaluate the risk factors involved.
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The decision to invest through SIPs should be based on your risk tolerance and financial goals.
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There are different types of SIPs, ranging from low-risk debt funds to high-risk equity funds.
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Debt funds are less risky as they include fixed-income securities such as bonds, government securities, and money market instruments.
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Equity funds are riskier as they include stock market investments that are volatile and subject to fluctuations.
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Ignoring Diversification
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Diversification is important in investing, especially when it comes to SIPs. Investing all your money in a single SIP scheme or fund increases the risk level.
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Diversifying your investments across different SIP schemes or funds is essential for effective risk management and improving overall returns.
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When you diversify, you spread your money across various asset classes, including equity, debt, and hybrid funds.
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Each asset class has its own risk and return characteristics.
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Investing in a mix of asset classes can help achieve the right balance between risk and returns.
For example, equity SIPs such as ICICI Prudential Bluechip Fund and SBI Bluechip Fund are considered to be high-risk investments, but they also have the potential to deliver high returns. Debt SIPs such as HDFC Short Term Debt Fund and Aditya Birla Sun Life Savings Fund are relatively low-risk investments that offer stable returns.
Explore all the options to know more about the best SIP plans.
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Not Reviewing Your Portfolio Regularly
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Regularly reviewing your portfolio is very important for successful SIP investing.
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SIP investing is a long-term process and requires constant monitoring and evaluation.
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Reviewing your portfolio allows you to track progress towards your financial objectives.
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It helps you make necessary adjustments to your investment strategy.
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It ensures that your portfolio is in line with your risk tolerance.
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Regular portfolio reviews also help identify underperforming SIPs.
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Not all SIPs perform equally well due to market conditions, changes in fund management, or other factors.
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By identifying underperforming SIPs, you can make necessary adjustments to your investment strategy.
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Timing the Market
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The stock market is unpredictable and can be affected by various factors such as a state’s economic conditions, political and global events.
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Timing the market is a common investment mistake.
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Many investors try to predict market movements and time their investments for maximum returns. It is almost impossible to predict market movements accurately.
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Trying to time the market can lead to missed opportunities and losses.
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Investors may end up buying at a high price and selling at a low price, resulting in losses.
They may also miss out on potential gains if they wait too long to invest or sell their investments too early.
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Underrating Step-Up Option
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The primary difference between a regular SIP and a step-up SIP is the growth of the corpus fund.
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The "Step-Up SIP" feature is designed to combat inflation and generate returns for the investor in accordance with the growth rate.
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Not using step-up options may hinder increasing funds to desired amounts.
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Consistent investment in SIPs can help achieve monetary objectives.
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Power of compounding and inflation-adjusted returns aid in achieving goals.
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Enhancing SIP installments with salary increase or bonus can help accumulate greater wealth.
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Increasing SIP installments periodically (say yearly) can bring in higher returns.
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Chasing High Returns
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Chasing high returns is a common mistake made when investing through SIPs.
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High returns often come with high risks and it is crucial to consider them before investing.
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Investing in SIPs with the sole objective of chasing high returns can be dangerous.
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Many schemes that offer high returns may not be sustainable in the long term.
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It's important to recognize that there's no such thing as a free lunch in the investment world.
- Insurance Companies
- Mutual Funds
|
Returns |
| Fund Name |
5 Years |
7 Years |
10 Years |
| SBI Life |
15.78% |
13.6% |
|
| HDFC Life |
21.9% |
16.66% |
|
| Axis Max Life |
29.3% |
22.69% |
|
| ICICI Prudential Life |
20.5% |
- |
|
| Tata AIA Life |
25.94% |
22.89% |
|
| Bajaj Life |
21.13% |
14.65% |
|
| Birla Sun Life |
23.51% |
17.02% |
|
| PNB MetLife |
31.41% |
24.68% |
|
| Canara HSBC Life |
16.82% |
12.4% |
|
| Star Union Dai-ichi Life |
14.69% |
- |
|
Fund rating powered by
Last updated: Oct 2025
| |
Returns |
| Fund Name |
3 Years |
5 Years |
10 Years |
| QUANT |
23.92% |
31.48% |
|
| PARAG PARIKH |
20.69% |
26.41% |
|
| EDELWEISS |
22.34% |
24.29% |
|
| KOTAK |
24.64% |
25.01% |
|
| MIRAE ASSET |
19.74% |
24.32% |
|
| PGIM INDIA |
14.75% |
23.39% |
|
| DSP |
18.41% |
22.33% |
|
| CANARA ROBECO |
20.05% |
21.80% |
|
| SUNDARAM |
18.27% |
18.22% |
|
Last updated: August 2025
How Do SIP Transactions Work?
Investing through SIP is done using ECS or Electronic Clearing System. It is a hassle-free way by which money gets debited from the investor’s bank account towards a mutual fund^^ investment.
| Date |
Investment Amount |
NAV |
Units Purchased |
| Jan 11 |
1000 |
298.50 |
3.35 |
| Feb 11 |
1000 |
269.28 |
3.71 |
| March 11 |
1000 |
268.96 |
3.72 |
| April 11 |
1000 |
282.66 |
3.54 |
| May 11 |
1000 |
286.33 |
3.49 |
| June 11 |
1000 |
280.64 |
3.56 |
| July 11 |
1000 |
281.05 |
3.56 |
| August 11 |
1000 |
277.63 |
3.60 |
| September 11 |
1000 |
248.36 |
4.03 |
| October 11 |
1000 |
245.41 |
4.07 |
| November 11 |
1000 |
253.73 |
3.94 |
| December 11 |
1000 |
235.85 |
4.24 |
| Total |
12000 |
44.82 |
|
| Average Price per Unit |
267.75 |
|
|
SIP Calculator
Monthly Investment
₹22.4 L
Top Funds with High Returns (Past 7 Years)
12.6%
Equity Pension
16.14%
Global Equity Index Funds Strategy
17.8%
High Growth Fund
15.5%
Pension India Consumption Fund
20.52%
Multi Cap Fund
14.53%
Accelerator Mid-Cap Fund II
15.85%
Multiplier
14.41%
Frontline Equity Fund
18.41%
Pension Mid Cap Fund
10.88%
Equity II Fund
13.87%
US Equity Fund
14.74%
Growth Opportunities Plus Fund
11.62%
Equity Top 250 Fund
13.77%
Future Apex Fund
11.51%
Pension Dynamic Equity Fund
14.04%
Accelerator Fund
Features of SIP
Some significant features of SIPs are:
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Systematic Investment Plan (SIP) is a mode of investment under which a fixed sum of money is debited from bank accounts periodically to invest in specific funds.
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The investor is allocated a certain number of units in accordance with the ongoing Net Asset Value or NAV.
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Each time money is invested, more units are added to the account of the investor.
Wrapping It Up!
Systematic Investment Plan (SIP) is a popular investment strategy that has proven to be effective in creating wealth over the long term. However, many investors make mistakes while investing in SIPs that can lead to suboptimal returns or even loss of capital. By taking necessary precautions, one can reap the benefits of SIP investments and build a secure financial future.
