Sanjay Kathuria Highlights Common Investment Pitfalls and Tips

During the Smart Arena segment of the Business Standard BFSI Insight Summit 2026, finance coach and content creator Sanjay Kathuria addressed several common mistakes investors often make. He emphasized the importance of avoiding impulsive decisions based on stock tips, unrealistic return expectations, and purchasing financial products without fully understanding their terms.

Kathuria pointed out that many investors fall into traps by investing in penny stocks with hopes of rapid gains or by trading futures and options (F&O) aiming to double or triple their money quickly. Reflecting on his own journey, he admitted, "I have made almost every mistake that investors make," while discussing these issues in a session titled 'Quest for returns: how smart investors can avoid traps' alongside Vedant Vichare.

He stressed that knowing when to exit an investment is just as important as choosing when to enter. Many investors hold on too long, hoping for the last bit of profit, which can lead to losses. Kathuria advised learning from past errors and cautioned against relying on tips from others when making investment choices.

Addressing the problem of mis-selling, Kathuria highlighted the role of regulatory bodies like the Reserve Bank of India (RBI) in protecting consumers. He warned investors to be wary if a relationship manager calls repeatedly about a product. "If a relationship manager calls you 3-4 times, don't buy that product. It means that product or plan is not suitable for you," he said. This advice urges investors to critically assess products rather than succumbing to aggressive sales tactics.

He further remarked on how consumers often scrutinize small everyday purchases more carefully than significant financial commitments involving thousands or even lakhs of rupees. "Investors should examine the costs and conditions of financial products before committing their money. The mindset should be to ask questions," Kathuria said, emphasizing an active and informed approach to investing.

Setting realistic expectations for returns is another key point he made. Kathuria cautioned against chasing extraordinary annual gains like 24, 30, or 50 percent, noting that such expectations could lead to disappointment and a short-lived relationship with the markets. He encouraged viewing the stock market as a long-term wealth-building tool rather than a source of exceptional yearly profits.

Patience and discipline, especially in mutual fund investing, are vital, according to Kathuria. He pointed out that many investors monitor the net asset value (NAV) of their mutual funds daily, even when their financial goals are years away. This short-term focus can be counterproductive. "Long-term wealth creation requires investors to remain focused on their goals rather than react to every market movement," he explained.

When asked about the challenges posed by weak market returns and the appeal of fixed deposits (FDs), Kathuria shared his personal experience of continuing a Rs 30,000 systematic investment plan (SIP) during the market downturn in March 2020. He stated, "The experience reinforced the importance of staying invested through market cycles." He also warned against seeking a single mutual fund that fits everyone’s needs.

Instead, investors should select financial products aligned with their specific goals, risk tolerance, and investment horizon. For example, small-cap funds might be appropriate for those with a longer timeframe and higher risk appetite, while fixed deposits may serve short-term objectives better. Kathuria summarized this approach with the advice, "Look for the right, and not the best."

He concluded by highlighting the benefits of regular investing and diversification as strategies to manage market risks. However, he reminded that these approaches do not guarantee returns, reinforcing the need for realistic expectations and informed decision-making.

In a broader context, Kathuria’s insights reflect ongoing challenges faced by individual investors in navigating the complex financial market environment. With the increasing variety of investment options available, understanding product features and aligning choices with personal objectives becomes essential. His guidance serves as a practical reminder to maintain caution, stay informed, and focus on long-term financial health rather than quick gains.