Top 5 investment mistakes to avoid during the festival season

There’s something about the festival season that changes the way we think about money. The lights, the bonuses, the atmosphere of abundance it all creates a peculiar mindset where financial decisions feel different. Less calculated. More optimistic. Sometimes dangerously so.

Over the years, a pattern emerges clearly. The same mistakes repeat themselves every October and November. Different people, different circumstances, but remarkably similar outcomes. Understanding these patterns doesn’t just protect wealth, it preserves the joy that festivals are meant to bring, without the regret that follows poor decisions.

1. Chasing the Festive Offer Mirage

The most common trap appears dressed as an opportunity:

“Diwali Special Returns!”
 “Festival Bonus Scheme!”
 “Limited Period High Returns!”

Why this happens: Festivals create a mindset of auspiciousness. If starting something new feels right, surely a Diwali-launched investment must be “blessed” too? Emotion often replaces rational analysis.

Reality check:

• Genuine investment opportunities don’t need festival marketing
• Returns don’t improve because it’s Diwali
• Risk doesn’t reduce because there’s a rangoli on the brochure

Ask yourself: Would this investment make sense in February? If the answer is “but it’s a Diwali special,” that’s your warning sign.

2. Making Major Moves Without Structure

Festival bonuses and year-end windfalls create a unique problem: sudden liquidity plus time pressure.

Common pitfalls:

• Dumping the entire bonus into one mutual fund mentioned casually
• Shifting everything to fixed deposits because “it feels safe”
• Pouring all funds into one “performing” stock

What gets missed: Age, risk tolerance, and financial goals are ignored in the excitement of “putting money to work.”

Better approach:
Park the windfall temporarily in a liquid fund, enjoy the festivals stress-free, and make structured allocation decisions later. Waiting two weeks costs little, but a poorly planned investment can cost a lot.

3. Timing the Market During Muhurat Trading

Muhurat trading has cultural significance, but the belief that it guarantees returns is a misconception.

The truth: Markets follow their own logic. Post-Diwali periods sometimes see growth, sometimes corrections.

Balanced approach:

• Invest a token amount during Muhurat trading if culturally important
• Base actual allocation on financial goals, valuations, and risk, not the calendar

4. Ignoring Liquidity Needs for Festival Expenses

Festival spending is real: gifts, travel, home decor it adds up. Yet many lock away funds in illiquid instruments right before the season.

Common scenario:

• Bonus invested early October
• Festival expenses exceed expectations
• Premature withdrawal leads to penalties or borrowing at interest

Smart planning:

• Keep festival expenses liquid
• Invest only the genuinely surplus amount according to goals

Example: If ₹50,000 is needed for celebrations, treat it as planned liquidity not poor discipline.

5. Following Herd Mentality During Festival Euphoria

Festival gatherings often become informal investment forums:

“Everyone is buying gold this Diwali.”
 “Everyone is investing in this new fund.”

The psychology: “Everyone” feels safe. Collective euphoria makes decisions seem correct.

Reality check: Individual factors like age, income stability, goals, and risk tolerance matter more than what others do. What works for the crowd might not work for you.

The Underlying Pattern

All these mistakes share a common thread: emotional decisions replacing systematic thinking. Festivals amplify joy, optimism, and abundance but these are not reliable financial guides.

How to protect yourself:

• Maintain the same decision-making framework you use year-round
• Ask the same questions in October you would in March
• Apply consistent discipline and goal-based reasoning

Because ultimately, good investments don’t need festival timing. They need sound reasoning, clear goals, and patient execution.

This festival season, celebrate with a full heart—but invest with a clear head.

Views are personal; the author is Joint Chairman and MD at BajajCapital Ltd