Smart Money | 5 important investment lessons for first time investors

So there is clearly a 3.5 percent to 5 percent arbitrage opportunity which is available and that is the rate at which your portfolio was compounding if you chose to invest the capital rather than prepaying the loan. So you need to understand where your capital is best serving you and take a conscious call depending on your timeframe and risk," Desikan said.

Desikan advised investors that while choosing an investment option one should not chase rankings as those are based on past performances. She said investors should look at fundamentals, their risk appetite, and their short and long-term goals and then take a call.

"While choosing where to invest, investors need to understand what their short-term and long-term goals are, how much risk they can take, and then accordingly allocate your investments towards that rather than just following trends.

Even if you go by the information available in the market, the best ratings that are available, they always talk about past performance and that might or might not work for the future because if you are not aware of the fundamentals, you might end up choosing probably a sectoral fund after the sector has run up or you might end up choosing something like debt for example when it is in a declining interest rate cycle. So understanding what the investment is, is very important," Desikan added.

She also emphasised on being dispassionate and disciplined while investing. She said investors should not make sentimental buys or make attachments to their investments but should book profits or cut losses at the right time as per their risk appetite.