1. Listen to Socrates when he said 'Know thyself'. While he was referring to the key in human advancement, it can well be applicable to your financial advancement. Get a handle on your financial goals and needs.
   
2. Evaluate what kind of returns you would need to earn to achieve your goals. Be realistic in your expectations.
   
3. Look at investments in diversified equity mutual funds for longer terms goals, those with at least a five to 10 year horizon. If your time horizon is three to five years, you can look at balanced funds which invest up to 65% in equity and 35% in debt.
   
4. Consider New Fund Offerings only if there is something unique about the new fund and only if it complements your current investments.
   
5. Give sector funds a miss unless you are bullish on a sector, understand the risks and choose to take on the risks for extra returns.
   
6. Avoid churning (frequent buying and selling) of your funds like a day trader.
   
7. Don't get fooled by the 'only Rs 10 NAV' spiel. There is no difference between a Net Asset Value of Rs 10 and Rs 100. A mutual fund is always sold at par and a Rs 100 NAV indicates the competence of the fund manager.
   
8. Invest in a systematic fashion every month and especially at every decline (if this is possible).
   
9. Be a consistent investor, not an erratic one.
   
10. Sell only when you need money or if something has gone fundamentally wrong with your investments

via rediff.com