Key Takeaways
✓Don't pick funds based on recent returns
✓Never stop your SIP during a market crash
✓Don't spread across too many funds
✓Keep insurance and investment separate
Mistake 1: Chasing last year's returns
The most common mistake — investing in a fund because it gave 40% last year. Mutual fund returns are cyclical. A fund that's a top performer this year may underperform next year. Always look at a 5–10 year track record, not just the last 12 months.
Mistake 2: Stopping SIP during a market crash
During the 2020 COVID crash, many investors stopped their SIPs. This was one of the biggest blunders. Market crashes are actually when SIP works best — you buy more units at lower prices (Rupee Cost Averaging). Those who continued their SIPs saw massive portfolio growth in 2021–22.
Mistake 3: Investing in too many funds
Holding 10–15 funds doesn't diversify your portfolio — it creates confusion. 3–4 good funds are enough. One Large Cap, one Mid Cap, one Hybrid, and one ELSS. More funds simply means overlapping portfolios with no extra benefit.
Mistake 4: Mixing insurance with investment
LIC endowment plans and ULIPs mix insurance and investment — and do neither well. Instead, buy a term insurance plan separately (pure protection, very affordable) and invest separately in mutual funds. Term insurance + mutual funds is the best combination.
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