4. Overlook Costs

Going for a balanced mix of stocks and funds is good idea. One can supplement this by going for low-cost funds. Joe Mansueto, CEO of Morning Star, says that Indian mutual funds must remove charging double fee for funds, if they want to prosper as U.S. MF firms. He says, "Increased competition and pressure from intermediaries to reduce costs will prompt fund houses to lower charges even further." Though low-cost funds are comparatively newer in our country, Mansueto believes it will soon pick up. Low-cost funds do not indicate a lower return on investments. Morning Star believes that low-cost funds are a better option in the long-run as they indicate future performance in a better manner.