Best Tax Saving Funds

a1. Magnum TaxGain Scheme

Investment Objective

The prime objective of scheme is to deliver the benefit of investment in a portfolio of equity shares, while offering tax rebate on such investments made in the scheme under section 80 C of the Income-tax Act, 1961. It also seeks to distribute income periodically depending on distributable surplus.

Asset Allocation

Instrument Plan ------------------ Portfolio -------- Risk Profile
Equity,PCD’s and FCD’s and bonds 80-100%------- Medium to High
Money market instruments-------- 0 – 20%-------- Low

Scheme Highlights

1. There is a statutory lock-in period of three years for investments in a Tax Saving Scheme (irrespective of the fact whether the investors claim the rebate u/s 80C or any other section or not).
2. Dividends may be declared depending on distributable profits of the scheme. Facility to reinvest dividend proceeds into the scheme at NAV.
3. Switchover facility to any other open-ended schemes of SBI Mutual Fund at NAV related prices available after the statutory lock-in period.


Entry Load
Investments below Rs. 5 crores - 2.25%
Investments of Rs.5 crores and above - NIL

Exit Load
Nil

Performance of SBI Magnum Tax Gain Scheme

Absolute Returns (as on Jan 04, 07)

Period -------------------------------- Returns (%)
1 mth ----------------------------------2.3
3 mths -------------------------------- 17.9
6 mths ---------------------------------36.6
1 year ------------------=--------------44.4
2 year --------------------------------196.8
3 year --------------------------------346.8
5 year --------------------------------947.0

2. Birla Sun Life - Tax Relief'96

Scheme Objective

Birla Sun Life Tax Relief'96 is an open-end Equity Linked Savings Scheme(ELSS) with the objective of long term growth of capital through a portfolio with a target allocation of 80% equity, 20% debt and money market securities.

Asset Allocation
80% in equity and equity related instruments.
Upto 20% in debt and money market instruments.

Entry Load
Investments below Rs. 5 crores - 2.25%
Investments of Rs.5 crores and above - NIL

Exit Load
Nil

Transaction Restrictions
3 year lock-in from date of allotment.

for more info...
http://www.birlasunlife.com/BirlaSunLife/Mutual_Fund/BSLAMC_MP/BSLAMC_InvestOption/Equity_Schemes/Diversified_Fund/Equity_TaxRelief96.aspx#Scheme%20Features

Performance

Period --------------------------------Returns (%)
1 mth--------------------------------1.3
3 mths--------------------------------13.1
6 mths--------------------------------36.7
1 year--------------------------------41.1
2 year--------------------------------94.8
3 year--------------------------------132.6
5 year--------------------------------429.3

3. HDFC Tax Saver

Investment Objective

The investment objective of the Scheme is to achieve long term growth of capital.

Entry Load.(as a % of the Applicable NAV)

In respect of each purchase / switch-in of Units less than Rs. 5 crore in value, an Entry Load of 2.25% is payable.
In respect of each purchase / switch-in of Units equal to or greater than Rs. 5 crore in value, no Entry Load is payable.

Exit Load: Nil

Lock-In-Period.
3 Years from the date of allotment of the respective Units.

Asset Type --------------------------------- % of Portfolio--------------------Risk Profile
Equities and Equity Related Instruments-----80%-100% -----------------Medium to High
Debt & Money Market Instruments---------- 0 - 20% -------------------Low to Medium

Performance:
Period-----------------------------Returns (%)
1 mth-----------------------------0.1
3 mths-----------------------------11.4
6 mths-----------------------------27.7
1 year-----------------------------32.7
2 year-----------------------------144.8
3 year-----------------------------254.5
5 year-----------------------------748.7

4. PruICICI Tax Plan

Save tax and top it up with the benefits of long term investing
It is really frustrating to see a chunk of your hard earned money being eaten by taxes month after month. To counter this, one normally invests in tax saving instruments. But it would be better if you look beyond mere tax saving and also provide a chance for your tax –saving investments to appreciate. PruICICI Tax Plan does just that. It allows you to harness the benefits of long term equity investing in addition to helping you save tax.

Investment Philosophy
PruICICI Tax Plan is an open-ended equity linked saving scheme (ELSS). It has a lock-in period of 3 years, which ensures that you compulsorily remain invested over this period. This 3 year lock-in gives the fund manager the flexibility to make strategic long term investments in a diversified portfolio comprising a mix of large and medium sized stocks, chosen after careful fundamental research. All these stocks are growth oriented and have a patient, long term style.

Investment Objective
To seek to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities

Investment Pattern
Equity & Equity related instruments upto 90%
Debt, Money Market and Cash upto 10%.

Entry Load
(i) For investments of less than Rs. 5 Crores : Entry load at 2.25% of applicable NAV.
(ii)For investments of Rs. 5 crores and Above : Nil

Exit Load
Nil

5. ABN AMRO Tax Advantage Plan

Investment Objective

The investment objective of the Scheme is to generate long-term capital growth from a diversified and actively managed portfolio of equity and equity related securities along with income tax rebate, as may be prevalent from time to time.
However, there can be no assurance that the investment objective of the Scheme will be achieved. The Scheme does not guarantee / indicate any returns.

Lock in period
The investment in the Scheme shall be locked in for a period of 3 years from the date of allotment.
The AMC reserves the right to change the Lock in period prospectively from time to time as may be permitted under the regulations, notification of the Government for the Equity Linked Tax Savings Scheme.

Options
The Scheme offers Growth Option and Dividend Option.The Dividend Option offers Dividend Payout and Dividend Re-investment facilities.

Load Structure
Entry Load :
In respect of each Subscription/ Switch-In* of Units for an amount less than Rs. 5 crores in value, an entry load of 2.25% is payable.
In respect of each Subscription/ Switch-In* of Units for an amount equal to Rs. 5 crores or more in value, no entry load would be payable.
* No entry load is payable for Switch - In from other equity scheme(s) ofABN AMRO Mutual Fund.

There is no Exit Load

Performance:

Period ----------------------Returns (%)

1 mth----------------------1.9
3 mths----------------------17.3
6 mths----------------------36.8
1 year----------------------36.4

6. Principal Personal Tax Saver Fund

Investment Objective
To provide long-term growth of capital

Investment Strategy
The Investment Manager will aim to achieve a return on assets in excess of the performance of the BSE 100 index. The strategy will be to allocate the assets of the scheme between permissible securities in line with the portfolio profile described above. The actual percentage of investment in various securities will be decided by the Fund Manager(s) within the limits specified in the Investment Pattern after considering the macro-economic conditions including the prevailing political conditions, economic environment and to adhere to the need for a diversified portfolio. The Fund Managers will follow an active investment strategy depending on market situation and opportunities available at various points of time.

Investment Composition
Equity and equity-related Instruments: Atleast 80% of the corpus Money Market and other liquid instruments: Up to 20% of the corpus

Plans for Investment
Growth

Load Structure
Entry Load - 2.25%

Exit Load - Nil

Performance:
Period ----------------------Returns (%)

1 mth----------------------2.6
3 mths----------------------17.0
6 mths----------------------36.3
1 year----------------------36.5
2 year----------------------95.4
3 year----------------------131.4

7. ING Vysya Tax Saving Funds

Ideally Suited For
Investors seeking tax benefits and participation in the equity markets

Options
Growth / Dividend / Bonus

Entry Load
Entry Load- 2.25% for investments below Rs 1 crore. For amount > 4crores and upto 10 crores, entry load of 2.25% will be applicable w.e.f. 29/09/06 .

Exit Load
An exit load of 2.50% of NAV will be levied for purchases/switch in made above Rs 10 crores on or after September 23, 2005. It is clarified that, the said exit load is applicable even for part redemption of applications made for investments above Rs 10 crores made on or after September 23, 2005.

Performance
Period---------------------------Returns (%)

1 mth---------------------------4.4
3 mths---------------------------17.2
6 mths---------------------------42.7
1 year---------------------------30.0
2 year---------------------------128.7

The Best Gift for your Child !

The best gift a parent can give his/her child is the gift of literacy! In this article, however, I am going to talk about something that is not taught in most schools across the world -- financial literacy.

Let me begin with an example. We stay in Mumbai. The other day, I asked my daughter Reet where she wanted to go. "Shopping" she said. "Crossword," she added. On further questioning, I realised she wanted to go shopping at Infinity Mall in suburban Mumbai and then go to Crossword to read books.

Later, I realised why she had responded in this manner -- the mall, after all, was where we went most often. I talked to several other parents and they said the same thing -- the mall was where they headed for with their families on most weekends. Ask yourself where you spend most of your time with your kids and I bet you will see where I am coming from.
We are living in a period of unprecedented economic prosperity where many of us are becoming more and more prosperous. This prosperity also brings with it a tendency to spend and make financial decisions that may not be in one's best interests.

Unfortunately, we are also living in an era of unprecedented 'time poverty'. As a result, though it has become very important for us to become financially literate -- and ensure that our families are financially literate as well -- many of us still do not know how to manage our money. Even today, making money is easier than handling or managing it with responsibility and tact.

In order to understand money, one must have a basic understanding of what it is all about, its importance in everyone's life and how to make wise decisions when it comes to money. Just the other day, I read an article on how financial literacy will be part of the CBSE curriculum next year onwards.

What exactly is financial literacy and why is it important?

Financial literacy means understanding:

~ Income, expenses and savings
~ Budgeting~ Assets
-- real and financial
-- and liabilities
~ Insurance and its purpose
~ Investments and how to make money work for you
~ Taxation~ Risk management, asset protection
~ How to handle situations such as disability, divorce, starting a business, inheritance
~ Wills, trusts, intergenerational wealth transfer

Financial literacy is important because it affects your day-to-day life as well as your future.
For example, I often come across people who buy insurance as an investment. This is a big mistake, but you will only understand your error if you have basic financial literacy.

The onus and responsibility of making our children financially literate lies on us. Don't expect schools, insurance companies, brokerage houses, banks or mutual fund houses to educate our children. If we don't, nobody else will.

Understanding MUTUAL FUND

What is a Mutual Fund?

A vehicle for investing in stocks and bonds
A mutual fund is not an alternative investment option to stocks and bonds, rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities.

Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the fund’s gains, losses, income and expenses.

Each mutual fund has a specific stated objective

The fund’s objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its history, its officers and its performance.

Some popular objectives of a mutual fund are -

Fund Objective What the fund will invest in
Equity (Growth) Only in stocks
Debt (Income) Only in fixed-income securities
Money Market (including Gilt) In short-term money market instruments (including government securities)
Balanced Partly in stocks and partly in fixed-income securities,
in order to maintain a 'balance' in returns and risk

Managed by an Asset Management Company (AMC)
The company that puts together a mutual fund is called an AMC. An AMC may have several mutual fund schemes with similar or varied investment objectives.

The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objective.

All AMCs Regulated by SEBI, Funds governed by Board of Directors
The Securities and Exchange Board of India (SEBI) mutual fund regulations require that the fund’s objectives are clearly spelt out in the prospectus.

In addition, every mutual fund has a board of directors that is supposed to represent the shareholders' interests, rather than the AMC’s.

The Basics of Mutual Funds

Net Asset Value or NAV

NAV is the total asset value (net of expenses) per unit of the fund and is calculated by the AMC at the end of every business day.

How is NAV calculated?

The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the fund’s
NAV.

Expense Ratio

AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100 in assets under management.A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio.

Load

Some AMCs have sales charges, or loads, on their funds (entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called no-load funds.

Open- and Close-Ended Funds

1) Open-ended Funds At any time during the scheme period, investors can enter and exit the fund scheme (by buying/ selling fund units) at its NAV (net of any load charge). Increasingly, AMCs are issuing mostly open-ended funds.
2) Close-Ended Funds Redemption can take place only after the period of the scheme is over. However, close-ended funds are listed on the stock exchanges and investors can buy/ sell units in the secondary market (there is no load).

Important documents

Two key documents that highlight the fund's strategy and performance are 1) the prospectus (legal document) and the shareholder reports (normally quarterly).

Benefits of Investing Through Mutual Funds

Professional Money Management

Fund managers are responsible for implementing a consistent investment strategy that reflects the goals of the fund. Fund managers monitor market and economic trends and analyze securities in order to make informed investment decisions.

Diversification

Diversification is one of the best ways to reduce risk (to understand why, read The need to Diversify). Mutual funds offer investors an opportunity to diversify across assets depending on their investment needs.

Liquidity
Investors can sell their mutual fund units on any business day and receive the current market value on their investments within a short time period (normally three- to five-days).

Affordability

The minimum initial investment for a mutual fund is fairly low for most funds (as low as Rs500 for some schemes).

Convenience

Most private sector funds provide you the convenience of periodic purchase plans, automatic withdrawal plans and the automatic reinvestment of interest and dividends.Mutual funds also provide you with detailed reports and statements that make record-keeping simple. You can easily monitor the performance of your mutual funds simply by reviewing the business pages of most newspapers or by using our Mutual Funds section in Investor’s Mall.

Flexibility and variety

You can pick from conservative, blue-chip stock funds, sectoral funds, funds that aim to provide income with modest growth or those that take big risks in the search for returns. You can even buy balanced funds, or those that combine stocks and bonds in the samefund.

Tax benefits on Investment in Mutual Funds

1) 100% Income Tax exemption on all Mutual Fund dividends

2) Capital Gains Tax to be lower of - 10% on the capital gains without factoring indexation benefit and 20% on the capital gains after factoring indexation benefit.

3) Open-end funds with equity exposure of more than 50% are exempt from the payment of dividend tax for a period of 3 years from 1999-2000.

ULIP Plans - ICICI, SBI, Metlife, HDFC, Tata

ULIP Plans from ICICI, SBI, MetLife, Tata-AIG, AVIVA


1. ICICI - LifeTime Super


Key Benefits of LifeTime Super

1.Potentially higher returns over the long term by investing in unit-linked funds
2.Additional allocation of units at regular intervals to boost your investment
3.Option to withdraw your money systematically over a period of 5 years on maturity of the policy
4.In case of an unfortunate event of death, your family will receive Sum1 Assured or Fund Value, whichever is higher.
5.Cover Continuance option available which life insurance cover, even if you wish to take premium payment.
6.Tax benefits on premiums paid and benefits as per the prevailing Income Tax Laws


Benefits in detail

Choice of Investments Options

1. Maximiser: Long Term Capital Appreciation
Equity & Equity Related Securities -----------------------0 – 75%
Debt, Money Market & Cash ------------------------0 – 25%
Potential Risk & Reward HIGH

2. Balancer: Balance of growth and steady returns
Equity & Equity Related Securities -----------------------0 – 40%
Debt, Money Market & Cash ------------------------60 – 100%
Potential Risk & Reward MODERATE

3.Protector: Accumulate steady income at a lower risk
Debt, Money Market & Cash ------------------------100%
Potential Risk & Reward LOW

4. Preserver: Protection of capital through very low risk investments.
Investments upto 20% can be allocated to this fund.

Debt Instruments - -----------------------------------0 – 50%
Money Market & Cash ----------------------------------50 –105%
Potential Risk & Reward Capital Preservation

LifeTime Super at Glance
MetLife

MET Smart Plus Smart Insurance. Smarter Investment.

You want to protect your family from life’s uncertainties; at the same time you wish insurance would yield higher returns on your investments. You want your insurance policy to help realize all your dreams. Met Smart is our answer for your quest

Met Smart is a transparent, unit linked whole life plan that matures at age 100. The premium you pay is used partly for insurance cover and the balance is invested in funds to buy units. Met Smart offers 3 insurance options as well as 6 investment options that you can choose from, based on your risk profile.

Met Smart Plus at a glance:

1.A Unit linked whole life plan that matures at age 100
2.Offers you life protection and the advantage of investing in stocks, debt instruments and government securities
3.A never before choice of 6 investment options covering the complete range of investment possibilities to suit your risk-return profile Preferential premium rates based on your age, gender, health and lifestyle.
4.Allows the flexibility to pay more premiums by way of top-ups
5.Convenient limited pay option that allows you to complete premium payment over a fixed term and enjoy the full benefits
6.Gives you the freedom to withdraw from your funds.

7.Offers you the option of switching between funds.

Eligibility

Fund Options

How to earn high returns in the Stock Market ?

What is stock market, is it speculation den or place to invest and create wealth?

The answer to this lies in how we deal with it. If we consider stock market as place to make fast/quick money, it is speculation den. When equities rise most of us feel that to make money we should follow 'high risk, high return' strategy.

In reality we are following 'high return, high risk' strategy. If we push our mind we will find subtle but important difference.

Does high-risk mean high return?

If we are feeling that by taking high risk we will 'necessarily' get high return, we are kidding ourselves. Word risk means probability of loosing money. High risk means high probability of loosing money. Therefore if you are willing to accept high probability of loosing money, you 'may' get high returns.

In long run -- over a period of 7/9 years -- equity markets are place to get high return with low risk. On the other hand any kind of speculation is high risk, low (no) return game.

Are you a speculator?

Another litmus test to find out whether we are considering stock market as speculation den or place to create wealth is the way we get anxious about our investments. If our investment horizon is more than 7/9 years away, we will not panic even if equity market falls for 7 months.

On the other hand if we are speculating, 7 bad days/weeks will give us anxieties. If 7 days/weeks fall give us anxiety, we are in speculation mode.

Lastly, if we start asking anyone who even remotely uses letter 's' of stock market, his/her views on near term movement of equity market, we are in speculating mode. We want to inquire about the near term movement because - irrespective of what we say - we have purchased equity for short term.

This is giving anxiety and we want someone - whom we want to consider as an expert - give us assurance. The way no one can predict the outcome of speculation, in near term no one can predict movement of equities.

Reason to discuss above behavior is because as human beings, we are intelligent breed and we do not allow ourselves to admit we are speculators. Therefore it is important to consider above and verify whether we are considering stock market speculation den or place to create wealth.

How to get a high returns ?

Rome was not built in a day. No matter how hard we try, we will not be able to create wealth quickly. It will take decades before 'stable' wealth is created.

Invest in equities if your financial goals are more than 7/9 years away.

You may either invest directly into equity markets, if you have the skill and time. Alternatively consider equity mutual funds. In last couple of years we have got equity mutual funds with varied investment philosophies e.g. index funds, large cap funds, mid-small cap funds and contrarian funds.

Soon we will have global equity funds. Mutual funds allow ease of operation, diversification, professional approach etc. You can invest in these funds either lump sum or you may also consider investing in a systematic way over a period of time.

Why ULIPs are best? - 4 Reasons......

Ask any individual who has bought a life insurance policy in the past year or so and chances are high that the policy will be a unit linked insurance plan (ULIP).

ULIPs have been selling like proverbial 'hot cakes' in the recent past and they are likely to continue to outsell their plain vanilla counterparts going ahead.

So what is it that makes ULIPs so attractive to the individual? Here, we have explored some reasons, which have made ULIPs so irresistible.

1. Insurance cover plus savings

To begin with, ULIPs serve the purpose of providing life insurance combined with savings at market-linked returns.

To that extent, ULIPs can be termed as a two-in-one plan in terms of giving an individual the twin benefits of life insurance plus savings. This is unlike comparable instruments like a mutual fund for instance, which does not offer a life cover.

2. Multiple investment options

ULIPs offer a lot more variety than traditional life insurance plans. So there are multiple options at the individual's disposal. ULIPs generally come in three broad variants:

Aggressive ULIPs (which can typically invest 80%-100% in equities, balance in debt)

Balanced ULIPs (can typically invest around 40%-60% in equities)

Conservative ULIPs (can typically invest up to 20% in equities)

Although this is how the ULIP options are generally designed, the exact debt/equity allocations may vary across insurance companies. Individuals can opt for a variant based on their risk profile.

For example, a 30-year old individual looking at buying a life insurance plan that also helps him build a corpus for retirement can consider investing in the Balanced or even the Aggressive ULIP.

Likewise, a risk-averse individual who is not comfortable with a high equity allocation can opt for the Conservative ULIP.

3. Flexibility

Individuals may well ask how ULIPs are any different from mutual funds. After all, mutual funds also offer hybrid/balanced schemes that allow an individual to select a plan according to his risk profile.

The difference lies in the flexibility that ULIPs afford the individual. Individuals can switch between the ULIP variants outlined above to capitalise on investment opportunities across the equity and debt markets. Some insurance companies allow a certain number of 'free' switches.

This is an important feature that allows the informed individual/investor to benefit from the vagaries of stock/debt markets. For instance, when stock markets were on the brink of 7,000 points (Sensex), the informed investor could have shifted his assets from an Aggressive ULIP to a low-risk Conservative ULIP.

Switching also helps individuals on another front. They can shift from an Aggressive to a Balanced or a Conservative ULIP as they approach retirement. This is a reflection of the change in their risk appetite as they grow older.

4. Works like an SIP

Rupee cost-averaging is another important benefit associated with ULIPs. Individuals have probably already heard of the Systematic Investment Plan (SIP) which is increasingly being advocated by the mutual fund industry.

With an SIP, individuals invest their monies regularly over time intervals of a month/quarter and don't have to worry about 'timing' the stock markets. These are not benefits peculiar to mutual funds.

Not many realise that ULIPs also tend to do the same, albeit on a quarterly/half-yearly basis. As a matter of fact, even the annual premium in a ULIP works on the rupee cost-averaging principle.

An added benefit with ULIPs is that individuals can also invest a one-time amount in the ULIP either to benefit from opportunities in the stock markets or if they have an investible surplus in a particular year that they wish to put aside for the future.

6 Common Investment Mistakes

In the heady days of bull runs, we tend to make far more investment mistakes than in normal times. Sure, most of us make money when the market is going up. But, when the bull run ends, we all have stocks and funds we wished we had never bought.

It is an established piece of investing wisdom that, to make money over the long-term, all you have to do is make sure you don't lose it.

Or, to put it in a different way, you don't so much have to do the right thing as you have to simply avoid doing the wrong ones. This may sound simple. But, if you look at reality, it turns out that avoiding mistakes are just as hard, if not more, than doing the right things.
Here are some common investing mistakes.

1. Having a piece-meal approach

The biggest and foremost roadblock to building a successful portfolio is the failure on an investor's part to look at investing in a holistic way.

Investments are not pursued with proper planning and a goal in mind. Instead, a sales pitch from a broker, a mutual fund agent or an insurance agent guides our investment decisions. And, yes, the year-end frantic tax planning too.

Do not judge the investment-worthiness of an avenue right at the moment of making the investment. Then, you will look at current market conditions only. For instance, when the stock market is rising, you will not look at investing in National Savings Certificate. But, the moment the market crashes, you will run to it. Or, just before March 31, you may end up buying an insurance policy you don't really need.

Your investment decisions should not be a collection of random individual investments.

2. Making the wrong choices

Here, we refer to the problem of being invested in wrong companies or mutual funds of the right type. So, it may be right for you to invest in diversified equity funds but you may have selected the wrong funds. Or, investing in stocks in the pharma sector may be a good idea, but you may have zeroed in on the wrong companies.
Investors have a tendency to get carried away with the current hot performers and tips from everyone. Always look at long-term performance where funds are concerned, and future growth prospects where a stock is concerned.

3. Going for too many or too few

This is a common problem with portfolios; specially in the case of mutual funds.
Many of us keep on adding investments in the name of diversification. Fund investors normally think they are getting the units cheap if they buy them at Rs 10 each, so they invest in virtually every new fund that comes into the market.
Having a huge portfolio ensures nothing except complexity. Diversify sensibly and objectively.

While most investors have the problem of plenty, some are guilty of too much concentration. Letting just a few stocks or a fund managers determine your financial fortunes might not be an ideal situation to be in.

Ideally, a portfolio should have at least five to eight stocks from at least three distinct sectors. Fund portfolios should not have less than four funds, preferably by different fund managers.

4. Chasing returns

The anxiety of missing out on the opportunity of becoming rich overnight in a bull run often induces even the disciplined investors to stray. There are times when greed takes over the long term view of investments and you may start investing in funds and stocks that have no right to be in your portfolio.

So a portfolio that was well on track to achieving your goals taking into account the risk you can take is now suddenly derailed.

5. Getting out of focus

Sometimes you may feel you are doing a job investing and being focused, but that may not be the case if you take a good look at your portfolio.
You may have invested in a few mid-cap stocks but, if you look at your mutual funds, you may find that a number of your funds are heavily invested in mid-caps. Or you may have invested in mid-cap funds.

Ditto with certain sectors. You may have bought a lot of stocks in the infotech sector and your mutual fund too may be heavily invested in tech stocks. That means your overall portfolio is skewed towards infotech.

Finally, when approaching your goal, it is safe to shift from equities to fixed return investments. Let's say you began saving for a home and gave yourself a five year deadline. If you are getting substantial returns on your shares after three years, you can sell them and put the money in a two-year deposit. If you wait to sell the shares when you near your five-year deadline, and the market is down, you will be in a soup.

6. Ignoring tax

When selling funds or stocks, tax considerations are the last thing on an investor's mind. But, you could save a lot by merely delaying your decision to sell by a month or two.
If you sell your shares or diversified equity funds after a year of buying, you pay no tax. So don't be too hasty to sell soon after buying just because of a small profit.
Or, if you want to invest in a diversified equity fund, you could look at an Equity Linked Savings Scheme. This is a diversified equity fund that offers a tax benefit under Section 80C. Other diversified equity funds do not offer this benefit.

So, here you are. If you find yourself committing any of these mistakes, step back and rectify them. If not, that's fine. But do keep them in mind to ensure you do not commit them in the future.