Last week a batchmate from Engineering reached out for help. He is a senior partner in an IT Firm, sharp business acumen, smarter career moves, good wealth but scattered investments, inconsistent returns, underperforming assets and the high fee he pays eroding his wealth.

In this edition of the Weekly Wealth Newsletter, I want to delve into these common mistakes that are wealth destroyers.

1. Chasing Returns – His Portfolio has many Thematic Funds and sector specific funds lacks diversification, has more timing risks ( Entry and Exit ) and its cyclical, not consistent performers.

Thematic funds tend to rise faster but also fall harder during market corrections. They behave like momentum bets, not core investments.

2. Overdiversification – His portfolio has 28 Number of Funds with 14 Asset Management Companies. More fund does not mean higher returns. It is overlapping.

He lost the benefit of choosing quality because your portfolio starts mimicking an index with extra costs. When you have too many investments, you don’t know which ones are driving performance. Tracking too many SIPs, statements, and holdings becomes timeconsuming.

3. Chasing Past Returns – Investing in the “best-performing fund” of last year thinking it will repeat. Markets are cyclical; past winners often underperform next. Different sectors perform at different times. A fund that did well last year may underperform in the current market
cycle.

4. Panic Selling during corrections – Selling investments when markets fall. Fear takes over during corrections or crashes. Every time he sold, Markets recovered with time; his fear-led selling turns paper losses into real losses.

Corrections are normal and healthy, not abnormal. After selling, you need to decide when to buy back, most investors miss the right moment

5. Ignoring Taxes when selling – Tax Cuts into Your Returns. He looked only at gross returns, not net returns after tax.

For example, selling equity funds or stocks before 1 year triggers ShortTerm Capital Gains (STCG) at 20% tax. Selling after 1 year triggers LongTerm Capital Gains (LTCG) tax at 12.5% (after ₹1.25 lakh exemption).