Real SIP mistakes from a 5-year investor journey and what it cost him. Simple lessons that can save you lakhs in your mutual fund investments.
My friend Akash started his SIP journey in 2019 with big dreams. Today, he's down ₹5 lakh from where he could have been. Not because markets crashed, but because of simple mistakes that seem obvious in hindsight.
I'm sharing his story (with permission) because these aren't complex errors - they're surprisingly common ones that cost Indian investors lakhs every year.
What happened: Akash heard his office colleague bragging about 30% returns from mutual funds. Without thinking much, he started a ₹10,000 SIP in the same fund. No goal, no plan.
The cost: When his bike loan EMI increased unexpectedly in 2021, he had to stop the SIP after just 18 months. Redeemed at a loss during COVID market volatility.
Lost opportunity: ₹1.8 lakh that could have grown to ₹3.2 lakh by 2026.
What I learned: SIP without a goal is just gambling. Before investing, answer: "What am I saving for and when do I need the money?" House down payment in 5 years needs different funds than retirement planning.
What happened: March 2020. COVID lockdown news everywhere. Akash's portfolio showed -35% in one month. He stopped all SIPs thinking "I'll restart when markets recover."
The cost: He missed buying units at the cheapest prices in years. When he finally restarted in December 2020, prices had already doubled.
Lost opportunity: Those who continued SIP during March-June 2020 made 50%+ returns by 2021.
What I learned: The hardest time to invest is exactly when you should invest more. Markets fall, people panic, prices get cheap. That's your opportunity, not your problem.
What happened: 2021 was crazy for small-cap funds - some gave 90% returns! Akash moved his entire SIP from a boring large-cap fund to a small-cap fund that had topped the charts.
The cost: 2022 hit small-caps hard. His "star" fund fell 45% while his old boring fund was down just 8%.
Lost opportunity: ₹2.1 lakh difference in portfolio value by switching at the wrong time.
What I learned: Last year's winner is often next year's loser. Better to pick consistent funds that don't crash your portfolio when trends change.
What happened: Started with ₹3,000 SIP in 2019. Got 15% salary hike in 2020, another 20% in 2021. SIP amount? Still ₹3,000.
The cost: If he had increased SIP by just 10% each year, he'd have ₹1.8 lakh more wealth today.
Lost opportunity: Treating SIP like a fixed expense instead of growing it with income.
What I learned: Your SIP should grow with your salary. Even ₹500 increase per year makes a huge difference over time.
What happened: Akash thought 8 funds meant better diversification. Turns out 5 of them were buying the same Reliance, TCS, and Infosys stocks.
The cost: Higher costs (8 expense ratios), no real diversification, and tracking nightmare.
Lost opportunity: Simple 3-fund portfolio would have been cheaper and better diversified.
What I learned: More funds ≠ better diversification. Check what your funds actually buy before investing.
What happened: Akash chose regular plans through his bank RM instead of direct plans. Didn't even know there was a difference.
The cost: 1% higher expense ratio means ₹3+ lakh less wealth over 20 years. That's literally paying someone else's salary with your returns.
Lost opportunity: Direct plans of the same fund give better returns automatically.
What I learned: Always choose direct plans. That 1% difference compounds to lakhs over time.
What happened: 2022 market was down 15%. Akash needed ₹2 lakh for family wedding. Redeemed SIP investments instead of taking a personal loan.
The cost: Sold at a loss + missed the recovery. If he'd taken a loan instead, the SIP would have recovered and grown.
Lost opportunity: ₹50,000 in missed gains by selling low instead of borrowing temporarily.
What I learned: SIP is for long-term goals only. For short-term needs, keep separate emergency fund or take loans.
After 5 years and these 7 costly mistakes, here's what Akash wishes he knew on day one:
Start simple: One good large-cap fund beats 12 random funds.
Start small but start now: ₹1,000 SIP at 25 beats ₹5,000 SIP at 35.
Markets will crash: That's your opportunity, not your problem.
Direct plans always: 1% expense ratio difference = ₹3 lakh over 20 years.
Goals matter: SIP without purpose = gambling.
Emergency fund first: Never touch SIP for short-term needs.
Increase with salary: Your SIP should grow as your income grows.
If you're just starting:
If you're already investing:
The truth? SIP works despite all these mistakes. But it works much better when you avoid them.
Calculate your SIP returns and plan better with our [[SIP Calculator](/disclaimer/calculators/sip)](/en/calculators/sip) - learn from Akash's experience, don't repeat it.
About the Author:
Researched and written by the BharatFin Editorial Team
Reviewed by: Certified Financial Planner
Last Updated: April 2026
Sources: AMFI, RBI, SEBI guidelines
This article is for educational purposes only. Consult a certified financial advisor for personalized advice.
Stopping SIP during market downturns. This defeats the purpose of rupee cost averaging and makes you miss buying units at lower NAVs when markets fall.
No, 3-4 good funds are better than 8-12 funds. Too many funds create overlap and dilute returns. Choose different categories like large-cap, mid-cap, and ELSS for real diversification.
Always choose direct plans. They have 0.5-1% lower expense ratio than regular plans, which can save you ₹3+ lakh over 20 years on a ₹10,000 monthly SIP.
Increase SIP by 10-15% annually or whenever you get a salary hike. Even small increases compound significantly over time - ₹500 extra per month can add ₹2-3 lakh to your final corpus.