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Nowadays, everyone is investing in mutual funds to grow their wealth. SIPs, the method of building a large fund by investing small amounts every month, are becoming increasingly popular. The reason is clear: even small amounts can lead to significant savings and generate good returns over the long term.

But many people make mistakes that directly impact their returns. If you also use SIPs, it's crucial to understand these mistakes.

Avoid these mistakes if you want strong returns from SIPs.
1. Stopping SIPs as soon as the market falls
Most people panic when the market falls and stop their SIPs. This is the biggest mistake. SIPs truly benefit from a downturn, as they earn more units during this time. When the market rises, these same units generate good returns. Therefore, it's beneficial to continue your SIPs rather than stopping them during downturns.

2. Stopping SIPs forever is wrong.
Sometimes unexpected expenses may arise in life, such as marriage, household expenses, job loss, etc. While stopping SIPs at such times is fine, it's wrong to stop them permanently. You can pause for a few months and then resume later, or reduce the amount. This is why SIPs are the best investment method.

3. Investing with a clear understanding of each fund.
Many people assume that any fund will provide good returns. However, not every fund is right for everyone. A big mistake many people make is assuming a fund is good based solely on past returns. It's wise to understand any fund thoroughly before investing. Invest based on your needs, not just returns.

When choosing a fund, keep these things in mind:

What type of assets does the fund invest in (e.g., equity or debt)?

What is your personal financial goal? For example, buying a home or retirement?

What is your investment horizon? That is, how long can you invest?

Selecting a fund based solely on returns is a mistake.

Selecting a fund based solely on high returns can be dangerous. You should always match the fund's strategy with your risk appetite and investment goals. Only then will your investment truly benefit you.

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