SIP — what is this? Is it a mutual fund scheme? A stock name? Or something else?
Back in 2007, when I got my first job, I had no idea.
Today you hear this word everywhere. Newspapers, TV channels, financial experts — everyone talks about SIP almost daily. But back then, I heard it and forgot it. That is usually what happens when we don’t care about something.
However, towards the end of 2007 and the beginning of 2008, when the market was reaching an all-time high, SIP started getting more attention. That’s when I began to notice it seriously.
I learned that SIP is a way to participate in equity markets, even if you don’t have a large amount of money. With just ₹500 to ₹1,000, anyone could start investing in mutual funds. That idea stayed in my mind.
It sounded simple. It sounded powerful. It sounded like a smart move.
So I started learning more about SIPs.
But in my excitement, I made one mistake — I treated SIP as a magic tool rather than understanding what I was really doing. I gathered more SIPs than I actually needed, without fully understanding the basics behind them.
And those first three years taught me lessons that were real — and costly.
In this article, I will share the mistakes I made while investing through SIP, and what they taught me.
I Started SIP Without Understanding What I Was Doing
When I started my first SIP, I did not have much knowledge or experience.
They looked simple to me. Too simple.
I had no idea:
How to choose funds properly.
How to plan my SIP for long-term benefits.
How to diversify between large-cap, mid-cap, and small-cap funds.
How to select mutual funds for long-term success.
I did not understand that SIP is an efficient investing tool — not a return amplifier.
But in my mind, I believed: More SIPs meant more benefits and lower risk of losing money.
So what did I do?
I just kept starting new SIPs.
I Chose Funds Based on Past Returns
I used to visit the AMFI website and look at funds that were on top of their category rankings. If a fund showed strong recent returns, I invested in it.
There was:
No analysis of long-term consistency
No check on expense ratios
No understanding of how the fund performed in bear and bull markets
No clarity about the fund category
Large cap? Mid cap? Small cap? I honestly did not know the difference.
Looking back, I was not really investing. I was enjoying the excitement — which was going to fade away soon.
No Asset Allocation Strategy
Since I had no understanding of asset allocation, my portfolio slowly became messy.
I ended up investing in multiple tax-saving funds that were largely large-cap oriented. They looked different by name, but many holdings overlapped.
I thought I was diversified. In reality, I was concentrated.
I had too many funds and no clear structure.
I had an efficient tool — SIP — but I had no plan on how to use it properly.
And that was my first big mistake.
I Panicked During Market Falls and Thought To Stop My SIP
We invest and expect that the market will only go up.
But markets don’t work that way.
And when we see our portfolio going down, we panic.
I felt the same.
Watching My Portfolio Going Down
On 11th November 2010, when the SENSEX fell by 1.37%. Then again on 12th November 2010, it went down by 2.1%. And again 2.19% on 16th November. And in this time my portfolio gone down from 39137 Rs to 37914 Rs.
I panicked.
I had been in the market for only a few months, and such drops felt unbearable to me.
I started thinking about stopping my SIPs. Anyone who has just started investing can relate to this feeling.
I also began doubting mutual funds and SIPs. Newspaper stories about FDs and PPFs beating SIP returns started haunting me. In those moments, even a small drop felt like I was doing everything wrong.
Watching TV and Reading Newspapers
During that time, I was constantly reading newspapers and watching TV for any news related to the stock market.
I wanted to hear good news. I wanted the market to move up. I wanted my portfolio to gain value again.
But looking back, I now realize that constantly consuming market news during volatility does more harm than good.
It increases fear.
And if we let fear guide us, we may end up damaging our own portfolios.
What Market Recovery Taught Me
Markets go down, and they also go up.
If I had stopped my SIP when the market fell, I would have later regretted it when it recovered.
Volatility is part of the process.
I learned that if I want meaningful returns from the market, I have to plan for the long term, stay invested when the market goes down, remain patient when it does not move for a long time, and stay disciplined even during sideways phases.
For successful investing, discipline, patience, and proper homework are all important. Without one, the other two lose their meaning.
And that was one of the important lessons I learned during my early years of investing.
I Tried to Time the Market Instead of Trusting My SIP
When the markets don’t move up as we expect, we start doubting our strategies and feel like doing something that we probably should not do. Some of those thoughts came to my mind as well.
The Temptation to Pause My SIP
FDs give fixed returns. PPF gives fixed returns. And you don’t see your money going down if you invest in them. Psychologically, we all want that comfort.
No matter whether I get 6% or 7.5% return, at least I can see my money growing steadily.
So when I saw that my fund was going into the red, and newspapers were highlighting that FDs had beaten SIP returns during certain periods, I felt the urge to pause my SIP.
But thankfully, my reading of investment books helped me think logically. I realized that short-term comparisons can mislead us. Because of that understanding, I did not stop my SIP — and that decision later proved important.
Starting to Consider FDs
At one point, I also thought it might be better to start putting some of my money into FDs because they give fixed returns and my money would feel safe.
But when I learned about the DICGC deposit insurance guidelines and understood the limitations and long-term impact of lower returns, I reconsidered that decision.
Looking back, if I had diverted my funds into FDs out of fear, I would not be in the financial position I am today. And probably, I could never have written the story about building a portfolio from ₹500 SIP to a large corpus.
We all may face similar situations during our investing journey. But instead of becoming victims of short-term fear, we need to keep refining our understanding and improving our decisions.
If you want to understand these basics more deeply, I have covered them in detail in my mutual fund learning hub.
FD returns with 7% ROI for 20 years with 5000 monthly investment: 2619827 Rs.
SIP returns with 12% ROI for 20 years with 5000 monthly investment: 4599287 Rs.
I Checked My Portfolio Almost Every Day
It became my habit to track the NAV of all the mutual fund schemes I was invested in. In fact, almost every day, I used to log in to the AMFI website and wait for the NAV to be updated so that I could calculate how much ups and downs had happened in my portfolio.
I was refreshing the website many times.
And when I saw that my portfolio had gone down compared to the previous day, it felt like I was not doing well. I started thinking that maybe mutual funds do not work. Why am I even investing?
This continued for quite some time.
But this practice only increased my anxiety. I was simply wasting my time doing this.
By checking daily, I was diverting myself from the real goal — to stay invested for the long term.
Instead of focusing on long-term growth, I was reacting to short-term fluctuations.
And long-term investing does not work that way.
It requires patience, discipline, and the ability to ignore daily noise.
I Had SIPs, But I Had No Clear Financial Goal
Without clear financial goals, your investments are like a moving car without any destination.
You are moving, but you don’t know where you want to reach.
Clear goals keep you accountable, motivated, and focused on your investments.
But during my early years, I did not have any clear financial goal.
Without financial goals, you have:
No Target Corpus
You don’t know how much money you actually need to accumulate.
For example, if I am investing for a house, I should clearly know how much money is required. With that clarity, I can easily calculate how much I need to invest and how much time it may take to reach that amount. It keeps me focused.
Another example is retirement. If I want a peaceful retirement, I need a defined amount of money so that I do not have to worry about finances later.
And that can only be done when I know how much I should invest, what return I can reasonably expect, and how long that investment needs to continue to reach the defined amount.
At that stage of my investing journey, I was investing without calculating my retirement needs properly. A simple retirement calculator could have given me much-needed clarity.
When we plan like this, we shut out unnecessary “if” and “but” thinking. We become more disciplined and more confident about our journey.
During my first three years, I was investing — but without a clear destination.
And that was one of my biggest strategic mistakes.
FAQ Section
Should I stop SIP when markets fall?
I believe you should never stop your SIP if your goal has not yet been achieved. If you have done proper homework before investing and are doing periodic checks of your fund’s performance, let the SIP do its work.
Is direct plan better than regular plan?
In terms of long-term returns, a direct plan can beat a regular plan because a regular plan includes an intermediary who is paid from the investor’s money. That cost is reflected in the NAV, which slightly reduces overall returns over time.
How many mutual funds are ideal in a portfolio?
If you are starting out, begin with an index fund, learn gradually, and then keep a maximum of 4–6 funds in your portfolio. Having too many funds requires more time to analyze periodically and usually does not provide meaningful additional diversification.
