Do not make these big mistakes in investing in Mutual Funds, adopt the right strategy to increase the growth of your portfolio.

Common Mistakes In Mutual Funds: Mutual funds are considered a very accessible and profitable medium of investment today. But due to lack of correct information, investors often make mistakes which reduce returns. For successful investment, it is not enough to just invest money but it is also essential to have patience. You can achieve your financial goals on time only by avoiding common mistakes in mutual funds.

Ignoring goals and risks

Deciding your financial goal before investing is considered a very important process. Investing in small cap funds without understanding the risk appetite can be harmful in future. Always choose the fund according to your goals so that the investment objective is fulfilled.

avoid copying others

Often investors invest money in any fund after seeing their acquaintances or social media. Every person’s income, responsibilities and risk tolerance are completely different. Instead of copying, one should create one’s personal portfolio by understanding one’s own financial situation.

illusion of past returns

Many investors take wrong investment decisions just by looking at the performance of the last one year. This is called recency bias in market language which is never correct. One should always do a thorough analysis of performance for at least 5 years or more.

mistake of timing the market

Buying when the market is falling and selling when it is rising sounds quite simple and correct. But it is almost impossible for any investor to accurately predict market movements. Instead of market timing, use ‘time in the market’ And focus on regular investments through SIP.

Avoid panic in the fall

Market fluctuations are a very normal phenomenon that investors need to understand. By panicking and withdrawing money after seeing a decline, you lose the benefit of future recovery. If your investment strategy is right then continue investing even in bad market times.

Do not keep more funds than necessary

Keeping too many funds in the portfolio leads to duplication of shares instead of diversification. Holding multiple funds of the same category makes management difficult and reduces returns. Always focus on choosing less number but better quality funds.

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Regular review of portfolio

Forgetting the investment completely once you have made it is considered the biggest mistake. It is important to review your investments from time to time so that the balance is right. Keep re-balancing the portfolio as per your goals to ensure better returns.

The power of information and discipline

Due to incomplete knowledge and overconfidence, the portfolio does not grow as expected. Investors should continuously pursue financial education to understand the nuances of the market. Discipline and correct information is the most effective and only mantra to achieve success in mutual funds.