In the new financial year…

Don’t make the same old mistakes!

2-minute read

A new financial year often begins with good intentions.

You review your portfolio, look for new opportunities and promise yourself that this year, you will plan better.

Yet, year after year, the same mistakes quietly creep in - chasing last year’s winners, ignoring risk and reacting emotionally when markets fluctuate.

In the current environment, where valuations are shifting quickly and global events are affecting markets overnight, thoughtful financial planning matters more than ever.

Here are some common mistakes investors should consciously avoid.

1. The Return-Chasing Trap

Many investors mistake financial planning for investing in the product that delivered the highest returns last year.

Financial planning should never focus on chasing performance.
Aligning investments with your goals, time horizon and risk tolerance is the key.

Financial planning begins with clear goals, not trending products.

2. The Asset Allocation Blind Spot

Asset allocation is one of the most powerful drivers of long-term portfolio outcomes- yet it is often ignored.

When markets fall, investors rarely regret missing the best-performing asset. They regret having too much exposure to one asset class.
True diversification means holding assets that behave differently across market cycles.

A balanced portfolio helps you stay invested during downturns.

3. Investing Without a Timeline

Investing without a time horizon often turns into speculation.
Different goals demand different strategies:
- Short-term goals require stability and liquidity.
- Long-term goals can tolerate market volatility.
When timelines are unclear, investors panic during corrections or become impatient when markets move slowly.

Every investment should be linked to a specific goal and timeline.

4. The Risk Tolerance Illusion

Many investors believe they can handle risk, but the real test comes during market declines.
A portfolio that feels comfortable during a bull market may become difficult to hold when markets fall by 20-30%.

Instead of asking, “How much return do I want?”, a better question is:

5. When Behaviour Becomes the Biggest Risk

Financial planning is not just about numbers. It is also about behaviour.

Herd Mentality

Even well-designed portfolios can be disrupted by common biases:

Recency Bias: Expecting recent performance to continue
Herd Behaviour: Investing in an asset because everyone else is
Overconfidence: Becoming aggressive after strong returns

In investing, discipline often matters more than intelligence.

Discipline is one of the greatest advantages in investments.

6. The ‘Set It and Forget It’ Mistake

Financial planning is not a one-time exercise.
Circumstances change. Income evolves. Markets move.

Without periodic reviews, portfolios can slowly drift away from intended goals and risk profiles.
Rebalancing helps in keeping the portfolio aligned with the intended plan under the changing dynamics.

7. The Liquidity Gap

Many portfolios look efficient on paper but lack easily accessible funds.

Unexpected events - medical emergencies, job changes or business disruptions - can force investors to withdraw from long-term investments.

Liquidity should not be seen as idle money. It is financial protection.

Liquidity prevents forced selling during downturns.

Financial planning mistakes are rarely dramatic. They are small, repetitive and driven by behaviour. As you begin planning for the new financial year, ask yourself one simple question: Is your portfolio built around your goals — or around market noise?

Investments in securities market are subject to market risks, read all the related documents carefully before investing.

ICICI Bank Limited is an AMFI Registered Mutual Fund Distributor. Mutual Fund investments are subject to market risk. Read all scheme related documents carefully. T&C Apply.