Types of risks involved in SIP

SIP | Image Resource: freepik.com

Risks are involved in each and every decision whether monetary or not. It is one of the most important factors to be taken care of while finalising anything. And especially if it affects your worth, or monetary value a whole research and a risk analysis process should be undertaken. 

Similarly, while choosing the correct SIP plan from Kotak Mutual Funds, the investor should not forget to conduct a risk analysis before deciding on the systematic investment plan. Some of the risks involved are listed below: 

Price risk: We all must have heard the very common phrase, ” Kotak Mutual Funds investments are subject to market risks”. This means nothing else but the fact that investments behave according to how the market behaves. Risk is usually related to the holding on period and the longer the holding on period, the lower is the level of risks involved. 

Credit risk: This kind of risk is relevant to the fixed income of the business entity. So when a bond or any other fixed income instrument existing in a particular company undergoes through a downgrade, and that too through the rating industry that is the time when the price starts to fall. 

Technology risk: In today's times, all the transactions and procedures are performed online and because of the various touch points and biometrics involved, there is a definite policy of technological failure. The failure can occur at various places like bank to debit funds etc. 

Fund management risk: the mostly occurred risk is the risk that the chosen scheme doesn't turn out to be as expected. In other terms, the scheme may not deliver up to its expectations. That's when the Kotak Mutual Funds manager under performs and that ultimately leads to lower returns on the SIP INVESTMENT.