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People in their young age, especially 20s and 30s, make some of the biggest investing mistakes. Here are some of the key mistakes people make and what you should do to avoid those.
If you’re in your 20s or 30s, here are some of the most common investment missteps to avoid — and what you should do instead.
Your 20s and 30s are exciting years. You’re either starting your career or growing in it, probably earning more than before, and feeling optimistic about the future. It’s also the perfect time to start investing — the earlier you begin, the more time your money has to grow.
But, this is also the phase where people make some of the biggest investing mistakes. And often, they don’t even realise it until years later.
If you’re in your 20s or 30s, here are some of the most common investment missteps to avoid — and what you should do instead.
1. Waiting Too Long to Start
In younge age, especially 20s, investing rarely feels urgent. There are student loans, travel plans, shopping sprees, or maybe even wedding expenses. In between this, investing is fully ignored, in most cases. This is a big mistake.
Starting early — even with a small amount — is more powerful than investing large sums later. Time beats money when it comes to compounding. The longer your money stays invested, the more it grows.
What to do instead: Personal finance experts suggest starting with whatever you can. Even Rs 500 or Rs 1,000 per month in a mutual fund SIP is a great start. Increase it as your income grows.
2. Trying to Get Rich Quick
The biggest mistake young investors make is to go for highly risky assets to earn fast returns. But, chasing quick gains is like gambling — sometimes you win, but often you don’t.
What to do instead: Stay focused on long-term, consistent investing. Build a core portfolio with mutual funds, index funds, or solid stocks. If you really want to experiment, use only a small portion of your money (5% or so) — but don’t bet your future on it.
3. Putting All Eggs in One Basket
This is very common issue. Some people invest all their money in one asset class — only stocks, only real estate, or only crypto. If that one asset takes a hit, your entire portfolio suffers.
What to do instead: Diversify. Mix equity, debt, gold, and maybe even real estate or international exposure. Diversification reduces risk and smoothens returns.
4. Investing Without a Goal
Goal-based investing is more effective than the investing without a goal. Whether it’s buying a home in 5 years, funding your child’s education, or retiring at 50 — knowing your goals helps you choose the right investments and stay disciplined.
What to do instead: Break your goals into short-term (1–3 years), medium-term (3–7 years), and long-term (7+ years). Match your investments to your timeline.
5. Ignoring Tax Efficiency
Efficient tax planning saves your money. For example, selling stocks within a year means you pay 20% short-term capital gain (STCG) tax. Even long-term gain (LTCG) above Rs 1.25 lakh are taxed at 12.5%.
What to do instead: Learn the basics of capital gains taxes. Also, make use of tax-saving investment options like ELSS mutual funds under Section 80C. It is important to know that ELSS and other such tax saving schemes are useful only under the old tax regime from the tax-saving point of view. However, LTCG and STCG work under both old and new regimes.
6. Not Building An Emergency Fund
Before you invest aggressively, make sure you’re financially secure. Imagine having to sell your investments in a market downturn because of a medical emergency or job loss — not ideal.
What to do instead: Set aside at least 3–6 months’ worth of expenses in a liquid mutual fund or savings account or sweep-in fixed deposit (FD) as your emergency cushion. You can also use this money to apply for good IPOs for listing gains.
7. Listening to the Wrong Advice
There are a lot of resources to read and listen on investing today. However, your investing should be done based on your financial conditions and goals.
What to do instead: Rely on credible sources. Consult a SEBI-registered financial advisor.
8. Thinking It’s Too Late (In Your 30s)
Some people in their 30s feel they’ve already missed the bus because they didn’t start investing in their 20s. That’s not true.
As famous saying goes: “The best time to start was yesterday. The second-best time? Today.”
What to do instead: Don’t beat yourself up. Focus on consistent investing, increasing your contribution as your income grows, and avoid repeating mistakes.
9. Not Reviewing Your Investments
A lot of young investors start SIPs and then forget about them for years. While “set and forget” sounds good, occasional check-ins are important.
What to do instead: Review your portfolio once or twice a year. Are your goals still the same? Is your risk profile changing? Adjust accordingly.
10. Forgetting to Invest in Yourself
This might sound unusual in an article about investing — but your biggest asset in your 20s and 30s is you. Your skills, health, and mindset can have the highest return on investment.
What to do instead: Take courses, read books, build new skills, stay fit. Whether it’s coding, communication, design, or digital marketing — investing in yourself can lead to better job opportunities, more income, and better financial decisions.
Disclaimer:Disclaimer: The views and investment tips shared in this article are for general educational purposes only. Readers are advised to consult a certified financial advisor before making any investment decisions.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso… Read More
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