Circumvent these mistakes while investing in MFs

Mutual funds are one of the most properly structured and governed product. They allow you to create a good amount of wealth with the help of disciplined investment via SIP (Systematic Investment Plan) route, through which you are able to buy more units when the markets are low and less units when the markets are high. This gives you the benefit of rupee cost averaging. Even if we look at the CAGR (Compounded Annual Growth Rate) historically mutual funds have beat the inflation with a good margin.
 
Lower the NAV better the fund
This is one of the common mistakes that people make by thinking that lower the NAV (Net Asset Value) better the fund. Mutual funds don’t work like stocks. In fact, they are derivatives of stocks. For example, let us consider two mutual funds, mutual fund A with NAV of Rs. 100 and mutual fund B with NAV of Rs. 1,000. Now if we assume that they hold the exact same securities then they would provide same returns irrespective of NAVs.
 
Timing the market
This is one mistake that investors commit even while dealing with stocks. Historically also if you analyse this, people who tried to time the market have lost most of their wealth. So be it stocks or mutual funds, it is very important to be disciplined while investing. You should invest via SIP rather than trying to time the markets.
 
Once investments are done. Forget about it.
This is a myth that people believe in. They think once I have started SIP in mutual funds I don’t need to look at it unless I am in need of that money. This mistake can lead to wealth destruction. It is not like once you have invested there is no possibility that the fund will not under-perform. You must review your mutual fund's portfolio at least annually. This will allow you to scrap the funds that no longer fulfilling your financial goals.