- After having linked your mutual fund's Systematic Investment Plan (SIP) investment with a particular financial goal, you shouldn't believe that it will work itself out.
- Although an SIP should be for a long period to harness its full potential, don’t continue with it indefinitely without checking on its individual performance against peers.
- You must review it periodically to assess how it is doing, whether it is suitable for your needs and financial goals.
- While monitoring the fund, do not look at the performance of the scheme in isolation, but compare it over different time frames with other schemes in the same category.
- Only if the fund is consistently under-performing the category should you consider switching over to another scheme.
- Also, keep an eye out for any undesirable change in the fundamental attributes of your scheme, such as a rise in the expense ratio, revision in the investment mandate, investment style or changes in its team.
- One should also have a clear time horizon in mind while investing without bothering about intermittent volatility.
- Investing only to make money is a vague idea, and if you link it with the goals in mind, you will have a better idea and know when to exit.
- You should also consider weeding and re-balancing when:
a) Your allocation is way off the mark.
b) You’re experiencing major gains/losses.c) Your goals have changed over time.
d) You’ve withdrawn funds recently.
e) You need funds for short-term returns.
f) Your risk profile has changed.
g) Your investments are under-performing and can be replaced with better options for the same goals.