A small mistake can lead to a huge loss, alert for those investing in FD-RD or SIP
There are many easy and safe investment options available today, but even a small mistake can derail your entire financial plan. If you want your hard-earned money to grow effectively, this information is crucial.
In today's times, as incomes rise, so too are the options for saving and growing money. Some choose fixed deposits, others make monthly RDs, and others invest in mutual funds through SIPs.
These three options are considered safe and reliable, but sometimes small mistakes can undermine an entire financial plan. Let's explore these mistakes we often overlook.
Relying solely on FDs can be costly.
People often invest their entire savings in fixed deposits, considering them the safest. While they offer safe and guaranteed returns, they often fail to beat inflation in the long run.
If interest rates are lower than inflation, the real value of money begins to decline. Therefore, relying solely on fixed deposits for large and long-term goals is considered unwise.
Discipline is essential for investing in RD.
The purpose of a recurring deposit is to inculcate the habit of saving every month. However, many people don't pay installments on time or miss them occasionally. This results in penalties and loss of interest. RDs are only effective if the fixed amount is deposited on time each month.
Stopping SIP midway is the biggest mistake
Many investors panic and stop their SIPs at the slightest decline in the market. This is a common and damaging mistake. The real benefits of SIPs are realized over the long term, where the effects of compounding and cost averaging become apparent. Stopping mid-term undermines the entire plan.
Investing without a goal
Without a clear investment goal, choosing the right investment option becomes difficult. Whether it's buying a home, educating your children, or retiring, each goal requires a different strategy. Setting a goal makes it easier to understand the investment horizon and risks.
Not having an emergency fund can create problems
Unexpected medical expenses or job-related problems often force people to break FDs or stop SIPs. This disrupts long-term planning. Therefore, it's crucial to maintain an emergency fund equivalent to 6 to 12 months of expenses.
Invest smart by combining FD, RD and SIP
It's better to strike the right balance rather than relying on a single option. FDs provide stability, RDs foster discipline, and SIPs provide long-term growth. For sound financial planning, set goals, time your investments, and avoid small mistakes.
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