If you are investing in mutual funds, SIPs, or the stock market, this article is extremely important for you. Most people believe that low returns, wrong funds, or market crashes are the reason investors fail. In reality, the biggest reason behind failure is human behavior. The psychology of money in investing decides success or failure more than any market movement.
This article explains why 98% of investors never reach their financial goals, even after starting SIPs and long-term investments, and why only 2% actually succeed.
TL;DR – Quick Summary
- 98% investors fail not because of low income, but because of poor money psychology.
- Most people exit when their portfolio reaches ₹50 lakh or ₹1 crore due to lifestyle greed.
- Discipline and patience are more important than choosing the best mutual fund.
- Frequent portfolio checking leads to emotional decisions and early withdrawals.
- Only 2% investors succeed because they stay consistent and follow long-term SIP discipline.
The Biggest Lie: “Money Grows Fast”
One of the most dangerous myths is that money grows quickly. Many people fall for unrealistic claims like “double money in 21 days” or “₹2000 SIP can make you ₹10 crore”. These are either misleading or hypothetical calculations.
In real life, wealth is built slowly. Even if someone reaches ₹5 crore in 20 years, the journey does not look straight. It goes through phases:
- First ₹5–10 lakh
- Then ₹25–50 lakh
- Then ₹1 crore
- Then ₹1.5–2 crore
- Finally, large wealth
The psychology of money in investing becomes most dangerous during these middle phases.
Human Psychology: The Real Reason 98% Fail
Let us understand this with a simple timeline.
Imagine 100 people started investing 20 years ago with the same goal.
What happens in reality?
When the portfolio reaches ₹50 lakh, around 50% people lose patience.
They buy a new car, upgrade lifestyle, withdraw money. Their discipline breaks.
When the portfolio reaches ₹1 crore, another 20% people lose control.
Home renovation, luxury items, emotional spending – they exit the journey.
When the portfolio reaches ₹1.5 crore, another 28% break discipline.
Travel, gadgets, house change – they think “we have enough”.
Finally, only 2% investors remain disciplined for 20 years.
These are the people who actually build wealth.
This is pure psychology of money in investing – not lack of income, not market returns.
Why Do 98% Investors Fail?
98% investors fail because of lack of discipline, emotional spending, impatience, frequent portfolio checking, and weak financial mindset.
Investor Behaviour Timeline (Table)
| Portfolio Level | Investor Reaction | % Exiting | Psychological Reason |
|---|---|---|---|
| ₹50 lakh | Buy car, lifestyle upgrade | 50% | Loss of patience, excitement |
| ₹1 crore | Home upgrade, spending | 20% | Overconfidence, emotional spending |
| ₹1.5 crore | Luxury indulgence | 28% | “We have enough” mindset |
| 20 years / ₹5 crore | Stay invested | 2% | Discipline + long-term vision |
The table below explains investor behavior at different portfolio levels based on real-life psychology patterns.
The Danger of Checking Your Portfolio Daily
One of the biggest enemies of wealth is over-monitoring.
You do not check your house value daily.
You do not check gold jewellery price every morning.
You do not calculate your land value every week.
But people check their mutual fund and stock portfolio daily.
Why? Because mobile apps make it easy.
This is where psychology of money in investing becomes dangerous.
The more you see money, the more you want to touch it.
The more you touch it, the faster it disappears.
Successful investors do not watch their portfolio every day.
Direct SIP vs Regular SIP – The Reality Nobody Talks About
There are two ways to invest in mutual funds:
- Direct Mode – via apps like Groww, Zerodha, Paytm
- Regular Mode – through an advisor or distributor
Direct SIP has lower expense ratio. That is true.
But here is the reality:
Most SIP cancellations happen in Direct Mode.
Why?
Because there is no guidance, no discipline control, no human support.
The psychology of money in investing requires emotional management, not just low cost.
“Read this part carefully, because this is where most investors make the biggest mistake.”
Real-Life Example: Discipline vs Online Investing
A low-income worker earning ₹12,000 per month started SIP of ₹2,000 through an advisor.
He is still continuing.
His friend started ₹4,000 SIP online through an app.
He stopped within 2 years when financial pressure came.
Same income level.
Different guidance.
Different outcome.
This proves that discipline is more important than expense ratio.
Another Critical Truth: Family Awareness
Many people invest online and never inform their family.
If something happens to you, will your family know:
- Where you invested?
- Which app?
- Which fund?
- How to claim?
In real cases, families lose track of investments because there is no advisor.
A small commission paid to an advisor is actually insurance for your family’s financial safety.
This is also part of the psychology of money in investing – we think only about returns, not continuity.
Discipline Is Bigger Than Returns
People focus too much on:
- Best mutual fund
- Highest return
- Lowest expense ratio
But forget the most important factor:
Can I stay invested for 15–20 years without touching this money?
If the answer is no, then no fund will save you.
The psychology of money in investing says:
- First discipline
- Then consistency
- Then returns
Not the other way round.
Rich Mindset vs Poor Mindset
To become wealthy, you need a rich mindset, not just a rich salary.
A rich mindset means:
- Long-term thinking
- Patience
- Emotional control
- Delayed gratification
Without this, even high income people remain poor.
This is the foundation of the psychology of money in investing.
Direct or Advisor – Final Practical Advice
If you are:
- Financially disciplined
- Educated about markets
- Can manage emotions
Then direct investing may work.
If you are:
- New investor
- Emotional spender
- Not financially trained
Then advisor route is safer.
The small commission is the price of discipline, guidance and continuity.
Final Conclusion
Markets do not make people poor.
Mindset makes people poor.
Only 2% succeed because only 2% can control:
- Their emotions
- Their lifestyle urges
- Their impatience
The psychology of money in investing decides your future more than any market return.
1. Why do 98% investors fail to build wealth despite SIP and mutual funds?
98% investors fail not because of the market, but because of lack of discipline, emotional spending, impatience and poor money psychology. Most people withdraw when they see intermediate profits.
2. Is the psychology of money more important than choosing the right mutual fund?
Yes, the psychology of money in investing is more important than fund selection. Even the best fund cannot make you rich if you lack discipline and long-term commitment.
3. Why do most people stop their SIP before becoming rich?
Most people stop their SIP when their portfolio reaches ₹50 lakh or ₹1 crore because lifestyle desires increase and patience breaks. This is a classic psychology of money mistake.
4. Is checking my investment portfolio daily harmful?
Yes, daily portfolio checking increases emotional decisions and leads to premature withdrawals. Successful investors rarely monitor their investments frequently.
5. Is direct SIP better than investing through an advisor?
Direct SIP is cheaper, but investing through an advisor provides discipline, guidance and emotional control, which most investors need to succeed long-term.
Disclaimer
This article is for educational purposes only. It does not constitute investment advice. Mutual fund investments are subject to market risks. Please consult your financial advisor before making any investment decisions.
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