Top mistakes to avoid while using a mutual fund app

Mutual fund apps have revolutionised the way people invest. With just a few taps, you can start, track, and manage your entire portfolio. However, this convenience can sometimes lead to overlooked details and avoidable errors. The way you use the app often matters more than the tools it offers. Many investors, even with good intentions, unknowingly make decisions that affect long-term outcomes. 

Having said that, let's understand where things usually go wrong so that you can use your mutual fund app more effectively and avoid costly missteps. 

Ignoring curated collections 

Most mutual fund apps offer expertly curated fund baskets to match specific goals like:

• Retirement

• Tax-saving

• Child’s education

• Wealth building

Skipping these collections means missing out on the groundwork already done for you by research experts. These collections are an ideal place to start, especially if you are unsure which schemes fit your needs.

Misreading fund returns

Practically, many investors just look at the total return numbers in a mutual fund app to make decisions and don’t check how they are calculated. Some returns are absolute, reflecting short-term growth, while others are annualised, showing performance over longer periods. A fund may appear to offer high returns, but that figure might only reflect a recent market rally. 

Look for 1-year, 3-year, and 5-year annualised returns separately. This helps you analyse consistency and how the fund has performed through different market conditions.

Reacting emotionally to market fluctuations

With a mutual fund app, you can buy, sell, or switch funds instantly. This control is beneficial, but it can also prompt emotional decisions during market dips or rallies. You might think you are fixing a problem, but every switch may involve exit loads or taxes. It also breaks the compounding cycle. 

Instead of reacting at the moment, use performance tracking and goal-planning features to stay aligned with your original investment plan.

Overdiversifying without purpose

Mutual fund apps give access to thousands of schemes, but this access could also lead investors to keep adding funds without a clear strategy. Holding too many funds, especially from the same category, creates overlap and complicates performance tracking. Instead of minimising risk, it can dilute returns and make your portfolio difficult to manage. 

It’s wise to avoid the urge to add funds just because they are available. Try to give more priority to quality over quantity by selecting a few well-chosen funds that serve different financial goals.

Not reviewing the portfolio regularly

Without regular reviews, you might continue holding underperforming schemes or miss opportunities better suited to your present goals.  

MF apps offer useful tools to analyse holdings, view category-wise allocation, track performance across timeframes, and assess risk levels. With these tools and periodic reviews, you can stay informed, make timely adjustments, and stay aligned with your investment purpose.

To sum up

A mutual fund app offers powerful tools to plan, invest, and track. However, the outcome depends on how wisely you use it. Make sure to avoid common mistakes like chasing short-term returns, ignoring curated options, overdiversifying, misreading returns, or neglecting periodic reviews. These minor yet costly missteps could lead you to invest in the wrong funds, miss profitable opportunities, or build a poorly structured portfolio.

You can choose MO Riise by Motilal Oswal to make your mutual fund journey informed and hassle-free. Backed by the legacy of a SEBI-registered public entity, over 40 lakh users already trust the app. You get access to multiple asset classes, expert-backed research, UPI-based payment options, and useful portfolio management tools. Curated fund collections, educational resources, and 24/7 help make it even more investor friendly.

Download MO Riise today and begin investing in mutual funds!