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Why do you lose money when you invest in mutual funds?

Sometimes it is the wrong expectation or the wrong time frame that acts against the possibility of making money. Investors also err when they take trading as investment.

July 06, 2015 / 03:46 PM IST

Vidya Bala

“I lost money in mutual funds. I do not wish to invest there again. I am happy with what my fixed deposits give me”. This was what a neighbour in my colony told me, soon as he heard that I research mutual funds.

Naturally, when we burn our fingers – our first reaction is to shut the doors on that option. In investment too, we seldom look back to know why we lost money.

Were we wrong, or were the markets? If you had invested in a ponzi scheme, evidently the product was wrong (although investors are almost equally at fault most of the time).