There's a phase every year, roughly between Navratri and the end of the wedding season, when I get more of these calls than at any other time. Somebody's been told something at a family function. Usually by an uncle, sometimes by a cousin who works in a bank, occasionally by a father-in-law whose opinion cannot be politely declined. And now they're asking me whether to do it.
This is a real problem and most financial writing pretends it isn't, because the standard answer, ignore unqualified advice, is useless when the person giving it will be at your daughter's wedding.
Why this person is usually sincere
Worth starting here, because the caricature is unfair and unhelpful.
They're almost never trying to mislead you. They had something work, or they read something, or they've been investing for years and feel they've learned something worth passing on. Telling you is generous by their reckoning, and often they're right that you should be doing something rather than nothing.
I've also met plenty of relatives whose broad instinct was sound. Start early. Don't keep everything in a savings account. Property isn't the only asset. Those are decent instincts and I'd rather somebody heard them at a family lunch than not at all.
What's actually missing
Not knowledge, usually. Two other things.
They don't know your situation. They don't know when you need the money, what you already hold, whether there's a loan running, or what you'd do if it fell thirty percent. They're recommending a scheme to a person, not to a situation, and the situation is where the answer lives.
They're not accountable. If it goes badly, nothing happens to them. Not a criticism, just a description. Advice with no consequence for the person giving it is a different kind of advice, and it's worth pricing accordingly.
There's a third thing that's less comfortable: you only ever hear about the ones that worked. Nobody at a family gathering describes the holding they got wrong four years ago. So the track record you're implicitly trusting has been edited, without anybody intending to deceive you.
The three kinds you'll hear
They're not the same and they shouldn't be treated the same.
A general principle. "You should be investing, not just keeping it in the bank." Often correct. Take it seriously.
A specific scheme. "Put it in this one, it's been doing very well." Almost always based on recent performance, which is the least useful basis available, and our post on why somebody else's fund did better covers where those numbers come from.
Something that isn't a mutual fund at all. A scheme somebody they know is running, an arrangement promising a fixed monthly return, a chance to get in early on something. This is the category to be genuinely careful with, and I'll come back to it.
What to actually say
The practical problem isn't evaluating the advice. It's declining it without causing offence, and here's what works.
Don't argue about the scheme. You'll lose, because they've got a number and you've got a reservation, and numbers win at a lunch table.
Instead, move it to your situation. "That sounds interesting, but this money's for something in two years, so I don't think I can put it anywhere that moves." That's not a rejection of them, it's a fact about you, and there's nothing to argue with.
Or borrow a third party. "I'll check with the person handling our folios and see if it fits with the rest." Perfectly polite, entirely true, and it moves the decision out of the room. I'm happy to be used that way and I've been the excuse plenty of times.
What I'd avoid is agreeing in the moment to end the conversation. Half the holdings I find that nobody can explain got there exactly that way.
The one you should refuse outright
Everything above is about ordinary well-meant advice. This part is different and I'd rather be blunt about it.
If what's being described isn't a mutual fund, a deposit or something else you can verify independently, be careful. Particularly if it involves handing money to a person rather than to an institution, promises a stated return, or comes with a reason to decide quickly.
The test is simple. Does the money leave your own bank account for a named scheme, and does confirmation arrive independently against your PAN from a registrar? If yes, the arrangement is inside the structure our page on how mutual funds are regulated describes. If it wants cash, or wants money in somebody's personal account, none of that applies.
Family connection makes people skip that check more often than any sales pitch does, and the losses I've heard about in this city almost all came through somebody known. Our post on checking whether somebody is registered takes two minutes and applies to relatives as much as to strangers.
The version that arrives on your phone
Worth noting that this has changed shape in the last few years, and the family version is now the smaller half of it.
The same advice arrives in group chats, forwarded from somebody nobody in the group actually knows. A screenshot of returns, a scheme name, an urgency. And because it came from a family group, it carries some of the trust that belonged to the person who forwarded it rather than to whoever wrote it.
That's the bit worth separating. Your cousin vouching for something isn't the same as your cousin having checked it, and usually they haven't, because forwarding costs nothing.
My rule for these is simple: a screenshot is not evidence of anything. It has no dates, no period, no benchmark and no way to tell which measure produced the number, which our page on how returns are calculated explains.
When they're right
Because sometimes they are, and I'd be doing the same thing I'm complaining about if I told you to dismiss it.
If the advice is that you should be investing at all, that a monthly amount beats waiting for a lump sum, that you've got too much sitting idle, or that you should have started earlier than you did, those are all reasonable and worth acting on.
Take the direction and leave the specifics. The instinct that you should be doing something is often correct. Which scheme is a decision that needs your dates and your holdings, and neither of those was known at the lunch.
If you're the relative
Worth saying, since some readers will be the person in this post rather than the one receiving it.
The most useful thing you can pass on isn't a scheme name. It's the habits: start, keep going, don't stop when it falls, raise it as your income rises. Those apply to everybody, they cost nobody anything if they're wrong, and they matter far more than selection does.
And if you do mention a specific holding, mention the one that didn't work too. It'll make everything else you say more credible, and it'll stop a younger relative treating an edited record as a complete one.
If somebody in your family wants a second view on something they've been told, that's a conversation we're happy to have with no obligation attached. Myfolios is an AMFI-registered mutual fund distributor (ARN-145870) working from Indore since 2014, and we'll tell you when the advice you were given was fine.
