Every day we come across advertisements in newspapers, magazines, billboards, television, and the internet, and even on trains, buses, and subways telling us to invest in mutual funds.

But before investing you must Know the mistakes to avoid. Knowing them will make your investment journey smoother and help you reach your destination or investment objective.

let’s look at these 6 mistakes you should avoid

1. Investing without a financial goal or plan

Investing without a goal is like running without a goal.

This is the most basic. Like the first stone of a building. It is important to think and plan to achieve a financial goal.

Example: A 24-year-old who just started working may have a goal of buying a car or a house in a few years OR may have a goal of saving money for marriage and then child-rearing expenses, as well enough to finance your school and college expenses OR you may have a goal of saving money for retirement

Whatever the goal, it is important to plan and allocate money based on the various goals.

2. Invest without budget.

Investing without a budget is like flying a plane without a fuel gauge.

If you don’t balance your earnings and expenses, you’ll never save enough to invest, which is a surefire way to crash-land since you never know when you’ll run out of fuel.

List your monthly net income and the items and amount you spend each month. You should make a budget plan to make sure you don’t overspend by being emotional and impulsive.

Experts call this as a “Cash Flow Plan” that will capture each item of cash in and out.

You can do this by writing in a journal or even entering the details in Microsoft Excel on your PC.

Some people find it difficult to save even 10% of their net income because they are impulsive, emotional, and like to live comfortably, while others save more than 50% of their net income because they are disciplined, conservative, and spend wisely only when necessary in the most basic needs.

You should decide the level of savings that you are comfortable with based on your goal.

In addition to monthly savings, as long as you get a lump sum such as bonuses, gifts, inheritances, lottery, etc. you must reverse that too.

However, remember that the more you save today, the better your future will be, as the money saved and invested in mutual funds will accumulate and grow over time.

Therefore, it is very important to do and Comply with the budget every month with total discipline. Only this will help you achieve your long-term goals.

3. Investing without understanding your ability to take risks

Investing without knowing your ability to take risks is like buying a garment without knowing your size.

You don’t know if it’s the right size for you and if you’ll be comfortable wearing it.

A general rule of thumb is that the money you not required for the next five years or more can be invested in equity mutual fundswhile the money you may need in the next five years should be invested in debt mutual funds and the money you may need in the next six months should be invested in money markets or liquid mutual funds

While this is a general rule, it is always recommended that you take a risk profile test that will scientifically demonstrate your ability to take risks.

These tests typically take no more than fifteen minutes and are available from any registered financial planner or mutual fund dealer/broker.

The result of the test is that you will know your exact risk profile.

(The four basic types of risk profiles are cautious, conservative, moderate, and aggressive.)

Each risk profile will tell you what percentage of your total money should be invested in equity, debt, liquid, and gold.

4. Invest in mutual funds without doing your homework

Investing in mutual funds without doing your homework is like trying to drive a car without getting a driver’s license.

“Never buy anything without doing the proper homework” is a generally accepted philosophy. This is also true for mutual funds.

Once you’ve identified your goals, monthly investment budget, and risk profile, the next step is to find out which mutual fund schemes are right for you.

For this, you can approach your financial planner or mutual fund dealer/broker, who will advise you on select schemes that will perform well over the long term.

You should not spread your investments across more than 3-4 high-yield funds. Since it will increase your paperwork as well as follow-up procedures without increasing your returns (example: if you are investing Rs 20,000 per month, distribute it equally among the top 3-4 funds)

5. Don’t SIP on Mutual Funds

This is another big mistake that is completely avoidable.

Equity, Balance Sheet and Tax Savings (ELSS) Schemes hold a portfolio of shares and share prices are never constant and rise or fall based on various general and company-specific market and economic factors.

Therefore, the prices of mutual fund schemes (called net asset value -NAV) keep going up or down.

The best and only long-term sensible method of investing in mutual funds is through the SIP (systematic investment plan) route.

The benefit is that when stock shares and fund NAVs go down, you get more units for the same amount of investment, and conversely, when stock shares and fund NAVs go down, you get fewer units for the same amount of investment. same amount of investment.

So, in the long run, you get an average price and thus save yourself the emotionally demanding option of investing all your money only at a particular constant price.

Another benefit is that since you earn income every month, the SIP facility will ensure that a fixed sum of money is debited from your bank account, on a particular date of your choosing each month.

This will ensure that you don’t have to remember to invest every month, as the SIP will put your investment on autopilot.

So earn, save and invest and finally… Spend a little… every month!

Many people invest… earn, spend and finally… invest a little… every month!

What do you think is the right approach to build your future..?

6. Not keeping the long term in mind and being impatient.

This is a mistake that many investors make. This has more to do with his temperament and personality than any other factor.

Many investors are temperamentally unfit as they continue to watch the stock market and mutual fund NAVs regularly and remain confused about their decisions.

It is strongly recommended that, like your goals, you should also allow a long enough time for your mutual fund investments to give you returns. This means that when you invest in equity mutual funds through the SIP route, you have to think about your goals that are 10 or 20 or even 30 years away and you have to be patient with your investments.

History has shown that over the long term, Indian stock markets have given returns in the range of 13-16% per year (time frame for this is the movement of the BSE Sensex from 1978 when it was 100 to January 2016 when it is around 24,000)

However, it should be noted that returns are not guaranteed and may vary based on market movements.

Since you have a long-term goal in mind, short-term market movements should not affect you and you should remain calm and patient. Patience always pays.

Start your SIP mutual fund today!!!