Being an advisor, I get an opportunity to evaluate several investor portfolios. Almost every time, my observation is the same. The portfolio selection is driven by one single parameter – best past performance.
This is the single guideline that, most probably, drives your investment decisions too. Whether you invest in stocks, mutual funds, gold, commodities, real estate or for that matter, to buy insurance (yes, some people still do invest in insurance), this is the one thing to look for.
You want to invest in the one that offers the best returns, maximum returns.
It almost turns into a chase. You keep switching your mutual funds from one to another because the other one has delivered far better returns.
And why not? You too want to get the best returns on your investments.
But hello! Those are past returns. The past is gone. It is not going to come back.
I am going to tell you the truth. Chasing the best or maximum returns is the biggest investment mistake you can ever make.… [Continue Reading]