Confirmation bias leads investors seek out information that firms their beliefs while ignoring anything that contradicts their belief.
If you are a millennial in India (age 25–40), you are probably thinking about buying a house, supporting parents, planning children’s education, and also planning for retirement. You may already be investing through SIP in mutual funds, buying stocks, gold, fixed deposits, PPF, or even trying new asset classes.
But here is the uncomfortable truth:
Many common financial mistakes are not about lack of knowledge. They are about psychology.
One of the biggest hidden traps is Confirmation bias based decision Making Mistakes — when we look only at information that supports what we already believe, and ignore the rest.
For example:
- If you believe “equity always gives high returns,” you may ignore market risk.
- If you believe “real estate is safest,” you may ignore liquidity issues.
- If you believe “crypto is the future,” you may ignore volatility.
This article will help you understand 5 common confirmation bias mistakes Indian millennials make — and simple ways to avoid them.
Disclaimer: This article is for educational purposes only and should not be considered financial advice. Always consult with a certified financial advisor before making investment decisions.
Mistake 1: Only Listening to Positive News About Your Investment
Many investors fall in love with one asset class.
Some examples in Indian context:
- “SIP is always best. Market long term mein upar hi jaata hai.”
- “FD is safe. Why take risk?”
- “Gold never fails.”
- “This small-cap fund gave 35% return last year. It will continue.”
When we like something, our brain searches for articles, YouTube videos, and social media posts that confirm our belief.
This is a classic Confirmation bias based decision Making Mistakes pattern.
Why This Is Dangerous
Markets move in cycles.
- Equity can stay flat for years.
- Real estate can remain illiquid.
- Gold can underperform.
- Small-cap funds can fall 30–40% in a correction.
If you ignore negative information, you may:
- Over-invest in one asset
- Hold loss-making investments too long
- Miss better opportunities
How to Avoid It
- Before investing ₹1,00,000 anywhere, ask: What are the risks?
- Search for negative reviews or downside analysis.
- Diversify across asset classes: equity, debt, gold, etc.
- Review portfolio once a year calmly — not emotionally.
Mistake 2: YOLO Bias – Spending and Investing Without Long-Term Thinking
“You Only Live Once.”
Yes, but retirement will come one day.
The yolo bias pushes millennials to:
- Spend ₹40,000 on gadgets using credit card EMI
- Take foreign trips without emergency fund
- Invest in trending stocks without research
- Ignore saving for retirement
In India, many millennials delay saving for retirement because:
- “Parents have property.”
- “Business will grow.”
- “I will earn more later.”
This is short-term thinking.
Why This Is Risky
- Inflation in India reduces the value of money.
- Medical expenses after 50 can be high.
- Depending only on children is not practical.
- EPF alone may not be enough.
If you start investing ₹5,000 per month at age 25 through SIP, it can grow into a large retirement corpus. If you start at 35, you may need double the amount monthly.
That is the power of time.
How to Avoid It
- Create a simple rule: Minimum 20% income goes to investment.
- Build a 6 months emergency fund first.
- Start SIP early — even ₹3,000–₹5,000 is fine.
- Increase SIP every year with salary hike.
Enjoy life, but plan for your millennial retirement too.
Mistake 3: Following the “Vibe Economy” Instead of Facts
Today, social media strongly influences money decisions.
When markets are rising:
- Everyone talks about small-cap funds.
- Finfluencers show high returns screenshots.
- You feel FOMO.
When markets fall:
- People say “Market crashed”
- You stop SIP.
- You panic sell.
This is what we can call vibe economy behaviour — making money decisions based on mood, not data.
This is also linked to consumption cultural related mistakes — buying things because others are buying.
Why This Is Dangerous
- You buy high when excitement is high.
- You sell low when fear is high.
- You stop SIP during correction — which is actually the best time to accumulate units.
Long-term wealth is built through discipline, not vibes.
How to Avoid It
- Continue SIP during market fall.
- Do not increase investment just because returns look attractive.
- Track long-term goals, not 3-month returns.
- Avoid checking portfolio daily.
Remember: Markets reward patience, not emotion.
Mistake 4: Copy Cat Mindset – Investing Because Others Are Doing It
In India, investment decisions are often influenced by:
- Friends in office
- WhatsApp groups
- Relatives
- Social media influencers
If everyone is investing in a particular IPO, stock, or NFO, we assume it must be good.
This copy cat mind set is a strong form of confirmation bias.
You believe:
“Everyone cannot be wrong.”
But history shows that crowds are often wrong — especially near market peaks.
Why This Is Risky
- You may not understand what you invested in.
- Your risk capacity may be different from your friend.
- You may enter at wrong valuation.
For example:
Your friend invests ₹2,00,000 in small-cap stocks.
He has no liabilities.
You have home loan EMI of ₹35,000 per month.
Same investment does not mean same suitability.
How to Avoid It
- Before investing, ask: Does this match my goals?
- Check your risk capacity honestly.
- Avoid investing only based on returns shown by others.
- Create asset allocation plan and stick to it.
Invest according to your life — not someone else’s.
Mistake 5: Ignoring Retirement Because It Feels Far Away
Many millennials in India focus on:
- House down payment
- Car
- Child education
- Lifestyle upgrades
Retirement feels far.
But if you retire at 60 and live till 85, that is 25 years without active income.
Without proper planning, that period can become stressful.
Delaying retirement planning is one of the biggest common financial mistakes.
Why This Is Serious
- Inflation at 6% can double expenses in 12 years.
- Medical costs increase with age.
- Lifestyle expectations are higher today.
If you want ₹50,000 per month today, you may need ₹1,50,000+ per month in future.
How to Avoid It
- Calculate retirement corpus needed.
- Invest in long-term equity mutual funds through SIP.
- Use PPF, NPS, EPF wisely.
- Increase investment regularly.
- Review goals every year.
Start small. Start now.
Conclusion: Awareness Is Power
Money mistakes are not always because we lack knowledge.
Many times, they are because of Confirmation bias based decision Making Mistakes.
You:
- Believe what feels comfortable.
- Ignore warning signs.
- Follow crowd.
- Delay important planning.
But the good news is — once you understand the bias, you can control it.
Quick Self-Check
Before your next investment, ask:
- Am I ignoring negative information?
- Am I investing because others are?
- Am I reacting to market mood?
- Am I delaying retirement planning?
- Does this match my financial goals?
If even one answer makes you uncomfortable, pause and rethink.