Top SIP Investment Mistakes You Must Avoid in 2024

A Systematic Investment Plan is a disciplined and systematic way of investing money in investment funds. It is particularly suited for long-term investments as it allows investors to benefit from the power of compounding over a longer period. As the returns are majorly market-linked, investors need to be careful while making investments. Let us look at some of the common mistakes all investors should avoid to gain better returns.

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Top SIP Mistakes To Avoid in 2024 

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:

  1. Not Having a Clear Financial Goal

    • One of the most common mistakes made by investors is not having a clear financial goal.

    • Before starting, it's important to know why you are investing and what you want to achieve through SIP investments.

    • A clear financial goal will help you select the appropriate SIP plan and stay focused on your investment objectives.

    • 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.

  2. Investing Too Little or Too Much

    • The amount invested through SIPs is critical for achieving financial goals.

    • Investing too little can result in failure to achieve financial goals.

    • On the other hand, investing too much can lead to liquidity issues if monthly expenses and cash flow needs are not considered.

    • Small investments may not generate desired returns in the long term.

    • 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.

  3. Not Considering Market Risk

    • Every investment carries a certain level of risk, including SIPs. It is important to evaluate the risk factors involved.

    • The decision to invest through SIPs should be based on your risk tolerance and financial goals.

    • There are different types of SIPs, ranging from low-risk debt funds to high-risk equity funds.

    • Debt funds are less risky as they include fixed-income securities such as bonds, government securities, and money market instruments.

    • Equity funds are riskier as they include stock market investments that are volatile and subject to fluctuations.

  4. Ignoring Diversification

    • 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.

    • Diversifying your investments across different SIP schemes or funds is essential for effective risk management and improving overall returns.

    • When you diversify, you spread your money across various asset classes, including equity, debt, and hybrid funds.

    • Each asset class has its own risk and return characteristics.

    • 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. 

  5. Not Reviewing Your Portfolio Regularly

    • Regularly reviewing your portfolio is very important for successful SIP investing.

    • SIP investing is a long-term process and requires constant monitoring and evaluation.

    • Reviewing your portfolio allows you to track progress towards your financial objectives.

    • It helps you make necessary adjustments to your investment strategy.

    • It ensures that your portfolio is in line with your risk tolerance.

    • Regular portfolio reviews also help identify underperforming SIPs.

    • Not all SIPs perform equally well due to market conditions, changes in fund management, or other factors.

    • By identifying underperforming SIPs, you can make necessary adjustments to your investment strategy.

  6. Timing the Market

    • The stock market is unpredictable and can be affected by various factors such as a state’s economic conditions, political and global events.

    • Timing the market is a common investment mistake.

    • Many investors try to predict market movements and time their investments for maximum returns. It is almost impossible to predict market movements accurately.

    • Trying to time the market can lead to missed opportunities and losses.

    • 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.

  7. Underrating Step-Up Option

    • The primary difference between a regular SIP and a step-up SIP is the growth of the corpus fund.

    • The "Step-Up SIP" feature is designed to combat inflation and generate returns for the investor in accordance with the growth rate.

    • Not using step-up options may hinder increasing funds to desired amounts.

    • Consistent investment in SIPs can help achieve monetary objectives.

    • Power of compounding and inflation-adjusted returns aid in achieving goals.

    • Enhancing SIP installments with salary increase or bonus can help accumulate greater wealth.

    • Increasing SIP installments periodically (say yearly) can bring in higher returns.

  8. Chasing High Returns

    • Chasing high returns is a common mistake made when investing through SIPs.

    • High returns often come with high risks and it is crucial to consider them before investing.

    • Investing in SIPs with the sole objective of chasing high returns can be dangerous. 

    • Many schemes that offer high returns may not be sustainable in the long term.

    • It's important to recognize that there's no such thing as a free lunch in the investment world.

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

Features of SIP

Some significant features of SIPs are:

  • 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.

  • The investor is allocated a certain number of units in accordance with the ongoing Net Asset Value or NAV.

  • 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.


  • Can I lose money in SIP?

    As with any investment, the returns on SIPs are also subject to market risks and can fluctuate based on various factors. The chances of losing money in a SIP depend on the type and performance of the fund.
  • How often should I review my SIP investment portfolio?

    You can review your SIP investment portfolio every six months to align with your goals and risk tolerance. Check more frequently if there are significant changes in circumstances. Stay updated on performance and adjust as necessary for long-term success.
  • How do I choose the right SIP investment plan for me?

    To choose the right SIP investment plan, identify your financial goals and investment amount, assess your risk tolerance, and research the fund's performance and expense ratio. Always diversify your portfolio and seek guidance from a financial advisor.
  • What are the advantages of SIP investments?

    SIP investments have several advantages, including cost-effectiveness, power of compounding, rupee cost averaging, and flexibility. They offer a convenient and effective way to invest in the stock market, allowing investors to create long-term wealth through regular investments.
  • What are some of the key factors that can affect the returns on my SIP investments?

    Market conditions, asset allocation, time horizon, expense ratio, and investment amount are some key factors that can affect the returns on your SIP investments. It is suggested to use SIP calculator to estimate the returns before investing.

+For Mutual Fund midcap category Returns & for Insurance midcap fund category Returns-
*Past 10 Year annualised returns as on 01-12-2023
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:-
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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