Money is deeply personal. I’ve seen it bring comfort, stress, joy, and sleepless nights. In my career—from working in banking halls to becoming a Certified Financial Planner (CFP®) and running FinBees Wealth—I’ve witnessed how small mistakes in investing quietly grow into big regrets.
In this article, I want to share five common mistakes I’ve seen Indians make with their investments, the lessons I’ve learned myself, and the framework I now use with my clients to avoid them. If you’re in your 20s, 30s, or 40s, this blog will speak to you directly.
Mistake 1: Chasing Hot Tips & Market Hype
What it looks like
In my early days at the bank, I often saw young professionals walk in with enthusiasm after watching a TV anchor scream “BUY NOW!” or because their cousin said a stock was “the next Infosys.” Many of them invested without research—sometimes even taking personal loans to “make quick money.”
The reality? A few won, but most lost. Market fads come and go. Remember cryptos in 2021 or small-cap frenzies in 2017? Those who blindly followed hype often ended up burnt.
My personal lesson
In my 20s, I too fell for a “tip” from a colleague. I invested without knowing the company’s business. Within months, the stock lost 70% of its value. That was my tuition fee in the school of investing.
How to avoid
- Invest only in what you understand.
- If you can’t explain to your spouse or a friend why you bought it, you shouldn’t own it.
- Replace tips with research. Today, we have mutual funds, professional PMS, and AIF managers to do that job.
Mistake 2: Ignoring Asset Allocation
What it looks like
Many investors put all their eggs in one basket—sometimes all in real estate, sometimes only in stocks, sometimes only in fixed deposits.
A client once proudly told me, “90% of my wealth is in two apartments.” On paper, he was worth crores. But when his daughter’s higher education bills came, he had to take an education loan—because selling property takes months.
My personal lesson
When I was younger, I loved equities and ignored debt. It felt boring. But 2020’s COVID crash taught me the importance of a cushion. If I hadn’t held some liquid funds, I would have been forced to sell stocks at a loss.
How to avoid
Follow the 60-30-10 principle (as a guideline, not a rule):
60% growth (equity, equity MFs, PMS, AIFs)
30% stability (bonds, debt funds, insurance savings)
10% hedge (gold, REITs, alternatives)
Rebalance annually.
Remember: Asset allocation, not stock picking, drives long-term returns.
Mistake 3: Trying to Time the Market
What it looks like
I’ll invest when the market corrects
I’ll sell now and re-enter later.
I’ve heard these sentences more times than I can count. But almost no one gets it right consistently.
One IT professional I met in 2020 had ₹10 lakhs to invest. He kept waiting for the big crash. By 2025, that ₹10 lakhs could have grown into ₹20–22 lakhs via SIPs. Instead, it sat idle in a savings account.
My personal lesson
I tried timing too—sold during a rally, waited for the dip that never came, and re-entered much higher. The stress, sleepless nights, and missed returns convinced me: time in the market beats timing the market.
How to avoid
- Automate with SIPs.
- Focus on goals, not Sensex points.
- Remember: Markets reward patience, not perfection.
Mistake 4: Overlooking Insurance & Emergency Funds
What it looks like
Investors rush to invest in stocks, crypto, or funds—while ignoring basics like term insurance, health insurance, and emergency savings.
One of my acquaintances lost his job in 2021 and had to redeem all his mutual funds at a loss because he had no emergency buffer. Another family faced huge hospital bills because they relied only on employer health cover.
My personal lesson
I too ignored this in my early career. I had SIPs but no term plan. If anything had happened to me, my family would’ve been left vulnerable. That realization hit hard.
How to avoid
Build an emergency fund = 6 months of expenses.
Buy term insurance = 15–20x your annual income.
Buy a family floater health insurance of at least ₹15–20 lakhs (outside employer cover).
Think of these as your financial seatbelt before you drive at speed.
Mistake 5: Ignoring Tax Efficiency
What it looks like
Investors book short-term gains repeatedly, losing a large chunk to taxes. Others don’t use available tax shelters like NPS or ELSS.
Tax rules in 2025 (India)
Equity: LTCG above ₹1.25 lakh taxed at 12.5%; STCG at 20%.
Debt: LTCG taxed at slab (no indexation benefit).
NPS: Additional ₹50,000 deduction under 80CCD(1B).
Insurance: Premiums above ₹5 lakhs/year may lose exemption.
My personal lesson
In 2019, I booked profits too early and ended up paying heavy STCG tax. If I had held a few more months, I would have paid much less.
How to avoid
- Always calculate post-tax returns, not just pre-tax.
- Use tax-efficient products: ELSS, NPS, SGBs.
- Sometimes, the smartest move is simply waiting.
The FinBees Framework: Our Simple Approach
At FinBees Wealth, we guide clients through a 4-step approach:
🐝 Plan – Define goals (education, retirement, home, independence).
🐝 Protect – Secure family with insurance & emergency funds.
🐝 Invest – Use a smart mix of equity, debt, real estate, gold, PMS, AIF.
🐝 Review – Rebalance annually, adjust to life changes.
This framework ensures money decisions are not based on panic or hype but grounded in strategy.
Free Resource for You
I’ve created the pointers for:
“5 Common Investment Mistakes & How to Avoid Them” (3 pages, case studies, checklists).
👉 Download Your Free Guide (PDF)
This guide expands on today’s blog with actionable worksheets.
Final Word
If you take one lesson from me, let it be this:
Wealth isn’t built by being perfect. It’s built by avoiding big mistakes and sticking with discipline.
As I often tell my clients: “Don’t run after the next multibagger. First, plug the leaks in your financial ship.”
With planning, protection, and patience, your money will serve you—not the other way around.