Before starting a SIP, what are the biggest misconceptions? An essential guide for investors.

News Topical, Digital Desk : Systematic Investment Plans (SIPs) in mutual funds have become extremely popular among Indian investors. Millions of people are investing small amounts each month to build a large corpus over the long term. While this method is easy, many misconceptions persist. 

Some people assume it guarantees returns, while others dream of promising returns ahead of time. Such misconceptions often lead investors into trouble, impacting long-term results. Let's explore some misconceptions about SIPs…

1. SIPs don't guarantee immediate high returns.
 
Many new investors assume that starting an SIP will yield stable and high returns every year. Social media also promotes it as an easy way to get rich quick, but the truth is different. SIPs aren't a shortcut; they offer the potential for improved returns over the long term.

The benefits come with time and regular investment. Even SIPs can't work wonders if the fund's performance is weak. Solid growth is usually only seen over longer periods, such as 7, 10, or 15 years.

2. More funds do not guarantee better returns

SIP investors often have the misconception that adding more funds to their portfolio will result in higher returns. This belief leads many to start SIPs in 8–10 different funds without understanding them thoroughly.

But this approach isn't always beneficial. Holding too many funds can make managing a portfolio difficult. It's wise to select three to five strong funds, and you can even seek expert assistance. Balance your SIP investments according to your goals.

3. Stopping SIP is wrong

It's often a common misconception that SIPs should never be stopped or discontinued. However, this isn't a good idea. Circumstances change, income can fluctuate, emergencies can arise, or your financial goals can change.

SIPs are not legally binding. They can be paused or stopped as needed. If a fund consistently underperforms, it may be wise to switch to a better one.

Read More: Before starting a SIP, what are the biggest misconceptions? An essential guide for investors.