Nowadays, more Thais are investing through mutual funds because they are accessible, allow investment starting from a few hundred baht, offer risk diversification, and suit DCA investing to build a retirement nest egg.
However, it's unfortunate that many have invested "consistently" for years but still fail to reach their goals—not because the funds are bad, but because they chose incorrectly or have behaviors that unknowingly drag down returns.
Here are 8 points the Bank of Thailand Learning Center warns investors about, which many are currently doing.
1. Buying funds because others say they are good. Funds that friends profit from or celebrities recommend may not suit you, as risk tolerance, goals, and investment horizons differ. Choosing wrongly from the start means even continuous DCA may not achieve your target.
2. Over-diversifying to the point of scattering. Holding many funds does not always mean safety because many invest in the same assets. Ultimately, you end up with a redundant portfolio that’s hard to manage and offers no better returns than a few well-planned funds.
3. Quickly switching to new funds. "New" does not always mean "better." Don’t decide based on hype or advertising; instead, consider the fund’s investment policy, risk, and how well it fits your goals.
4. Increasing investment only when the market rises. Many invest boldly when seeing profits but stop buying as soon as prices drop. The heart of DCA is "consistent investing," not market timing, because no one knows the exact highs or lows.
5. Being attached to a fund and unwilling to acknowledge changes. A fund that performed well before might not suit the future if its performance or management approach changes. Investors should be willing to reassess rather than hold just because they bought it before.
6. Impatiently switching funds too often. Investing takes time, and fund managers also need time to prove their skills. Changing funds every time short-term returns disappoint may cause you to miss out on long-term gains.
7. Buying and forgetting without reviewing the portfolio. Long-term investing doesn’t mean buying and leaving it alone. You should follow economic conditions and review your portfolio periodically to keep your investment allocation aligned with your goals and risk tolerance.
8. Never checking who manages your money. Mutual funds entrust professionals to manage your money, so you should regularly follow their performance, policies, and any changes in fund management, as these affect long-term returns.
There is no shortcut in investing, but there are "avoidable mistakes." By choosing funds suited to yourself, investing disciplinedly, and reviewing your portfolio regularly, you have a better chance of reaching your financial goals than chasing trends or frequently changing plans. Sometimes, what delays retirement is not the stock market but investors’ own behaviors.
Source: Bank of Thailand.
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