5 mutual fund traps holding you back from lifelong riches

Summary: The road to riches is paved with traps that can break your confidence. In this article, we highlight five such mutual fund traps that you can avoid. Our goal is to ensure you can build wealth in an effective manner. In school, teachers overlooked the brilliance of Albert Einstein. In fact, one of them told him, “You’ll amount to nothing.” Luckily, Einstein didn’t let those words trap him into a spiral of doubt. Instead, he went on to transform science and spark technologies that shape our lives even today. Mutual fund investing also has such traps that can break the confidence of an investor. However, the real difference between a seasoned and a new investor lies in how they adapt and move forward. This article helps you recognise five such traps. And by making a simple change in your approach, you can turn these potential setbacks into stepping stones for long-term success. Starting late When we are in our 20s, investing is hard. Our income can’t seem to keep up with the onslaught of financial responsibilities. So, we put off our SIP for another day. However, there’s a hidden cost to every form of procrastination. Except this is much higher in the case of investing. Let’s take the case of two colleagues: Rohit and Ananya. Rohit invests regularly with a monthly SIP of Rs 15,000 in funds of his choice. He has been disciplined with his investments, putting money aside for the last five years – like clockwork. Ananya, on the other hand, started investing 15 years ago. And her SIP is a significantly smaller sum of Rs 5,000. If both earn 12 per cent per annum and check their portfolio today, who do you think would come out on top? Surprisingly, Ananya will be far ahead despite the smaller sum. She’ll have a substantial Rs 23.8 lakh. Rohit will be left with a little over Rs 12 lakh. This is the power of time. If you start with even a small sum, you can build a fortune provided you start quickly. Suggested read: This ₹5,000 SIP grew twice as bi