Why do most people fail to make money in mutual funds despite starting SIPs early?

The most critical factor in investing is not picking the perfect fund but actually managing your own behavior during market dips. When picking a mutual fund, most people assume the only thing that matters is the return or finding the best growth strategy. They spend weeks analyzing fact sheets and comparing value versus growth approaches.

But data shows that well over 50% of people who start a SIP never actually continue it over the long term. The moment the market dips or a correction happens, they panic and exit their investments. No amount of metric analysis or fund selection will save your portfolio if you lack the discipline to stay invested when things look bad.

Investors also frequently sabotage their portfolios by chasing the latest trends. They see the EV sector or small caps dominating the headlines and they stop their regular SIPs to chase those high returns. They also make the mistake of comparing apples to oranges.

They will compare a thematic defense sector fund against a broad large-cap fund. These funds hold completely different types of stocks and serve entirely different purposes. To actually build wealth over a 15yr or 20yr horizon, you need to ignore the noise.

Set up a simple portfolio of two or three funds and regularly compare your active funds against a benchmark index like the Nifty 50. If your active funds consistently underperform the index over a long period, you might be better off just using passive index funds.

Overthinking your portfolio often leads to poor decision-making. Let time and compounding do the heavy lifting.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.