Money Psychology
Why You Bought That Fund Because Your Cousin Did
Somewhere in your portfolio is probably a fund you can't fully explain. Not a bad fund, necessarily — just one where, if you're honest, the real reason you bought it traces back to a cousin, a colleague, or a family WhatsApp group, more than any analysis of your own.
This is more common than almost anyone admits, and it isn't purely irrational.
For most of India, formal financial advice arrived late and unevenly. For decades, the most trusted source of financial information for an enormous number of families wasn't a research report — it was someone they trusted personally, who'd already been through the decision and lived with the outcome. Following that person wasn't lazy; it was often the only source of real, lived information available. There's a reason word-of-mouth remains one of the most powerful forces in Indian personal finance, and it isn't purely because people are gullible. Trust earned in person is real trust.
The failure isn't following someone's example. It's assuming their situation is your situation, when three things are almost always different and rarely checked:
Timing. If your cousin invested in a fund five years ago, they bought at a completely different valuation, entry point, and market cycle than you would today. The fund that made them money over five years isn't a promise about the next five — especially if you're buying in after the run they benefited from has already happened.
Goals and horizon. A fund that made sense for someone saving for a child's education fifteen years out is a very different fit for someone building an emergency corpus for next year. Same fund, opposite suitability, and the conversation almost never gets that specific.
Risk capacity. Two people can have identical incomes and completely different tolerance for watching a portfolio fall 25% in a bad year. What let your cousin sleep at night might genuinely keep you up.
Don't discard it — the underlying instinct to trust someone you trust isn't wrong. Just add one step before you act on it: ask why it worked for them, specifically, not just that it worked. If the honest answer maps onto your own goals, timeline, and comfort with risk, it's a genuinely useful starting point. If it doesn't, the fund itself might still be a perfectly fine fund — just not, this time, for you.
The best use of a good recommendation isn't copying it. It's using it as the reason to ask a better question than you would have asked on your own.
Atin Kumar Agrawal, Abundance Financial Services (ARN-251838), is an AMFI Registered Mutual Funds & SIF Distributor. This article is educational and general in nature — book a free consultation if you'd like a fund recommendation checked against your own actual goals.