Are MF investors committing the same mistakes again?

Mutual fund advisors say individual investors, especially the new DIY investors, are committing the same mistakes they had committed last year and a few years ago during demonetisation. They point out that most of these investors pay little attention to their investment objective, time in hand to achieve them, or their risk-taking capacity. All they care for is the top-performing schemes-be in current or past toppers, they say.“How is my portfolio - that’s the question I get from investors. They don’t share any other information. Either they don’t know or care,” says a mutual fund advisor who doesn’t want to be named. “There are some geniuses who can comment on the portfolio without any personal or investment details,” he adds.Mutual fund advisors say they come across investors committing the same mistakes again and again. They point out that investors were committing the same mistakes after demonetisation and again last year. They point out that banking on the wrong products is one of the biggest mistakes.Well, let us say it once again- the ‘best’ scheme may not be the best for you. A scheme becomes the best when it meets your investment objectives, horizon, and risk profile. For example, Parag Parikh Flexi Cap Fund may not be suitable just because you are not a long-term investor. Or you are a very conservative investor who doesn’t want to take any risk.There are many investors who refuse to invest enough time educating about their investments. For example, you cannot complain about volatility or underperformance if you have invested in mid cap or small cap schemes. Similarly you can’t complain about lower returns when you have invested in a hybrid scheme. These schemes invest in a mix of equity and debt. They are less risky and volatile. They will also deliver lower returns.Don’t expect thumbs up from everyone about your investment choices. How is my portfolio or how good are my stocks - the question won’t always get you appreciation. Your reasons for the selection won’t be obvious to everyone. So don’t ask everyone about your choices, say mutual fund advisors. They have a small lesson for you: invest in products you understand well. Be it stocks, thematic funds or small cap funds.“These are investment products, not some lucky draw. If you invest like a pro, you will make money. If you approach the whole thing like an amateur, you may not come out as a winner,” says the mutual fund advisor. Mutual fund advisors say investors should hire a reliable investment advisor or follow one person who gives free advice. They should also spend time learning about basics if they want to be a successful DIY investor.

from Economic Times https://ift.tt/3tpZywJ