Most personal finance journeys typically pass through three phases: crisis, abundance, and reflection.
In times of crisis, most of us learn harsh lessons and quickly move on, either forgetting the mistakes or trying not to repeat them. In times of abundance or bull runs, we tend to go with the flow, almost on autopilot, and enjoy the returns, worrying less about the future.
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However, it is times of reflection, when nothing seems to be moving our way, even when there is no visible crisis, that test the real mettle of our financial plans. Such times are like mirrors, showing the real face of things, letting us doubt our strategies and prepare better for the future.
2025 was one such year of reflection, when Indian markets neither crashed badly nor touched the moon. But it put the spotlight back on some evergreen personal finance lessons that many investors had ignored in previous years. Moreover, the passing year has given so many reasons to reflect on, spiced up with jaw-dropping regulatory changes, that I can’t stop calling it one of the best years for personal finance.
Let’s have a look at five such reasons:
1) Markets ended the year in the Green, many investors in the Red, but with several learnings
At the time of writing on December 30, 2025, both Nifty and Sensex were just around 8.18 and 8.89% up, respectively, in a year. Clearly, the markets ended the year in the green.
However, a large number of equity mutual fund schemes delivered negative returns across small-cap, mid-cap, multi-cap, flexi-cap, ELSS, focused, and thematic segments. Only three equity categories (large-cap, dividend yield, and contra) didn’t have any scheme with negative returns.
The table below shows the highest and lowest returns of schemes in different active equity mutual fund categories in a year till December 26, 2025. The average returns for most equity schemes were also in the single digits in a year.
Source: AMFI, 1-year return data as of December 26, 2025
For investors who got into mutual funds before 2025, expecting 12-15% or even higher annual returns, the above table can be heartbreaking, especially if they were not invested in schemes that delivered the best returns.
However, not everyone ended the year disappointed.
Investors who had started investing a part of their portfolios in gold and silver ETFs and funds before 2025, or got some exposure to international funds, ended the year with gains as these schemes delivered good returns in a year (see table below for gold and silver ETF returns).
Above data and lower return experiences have given investors the following lessons to reflect on their current investment strategies.
Interestingly, these are evergreen lessons in personal finance that many investors had overlooked in the bull runs before 2025.
a) Diversification and proper asset allocation are keys to remaining financially healthy at all times. This helps when one asset class fails to perform, but others do well.
b) Investing heavily in just one asset class can be disastrous. For instance, if you had invested heavily only in mid-cap and small-cap schemes in 2024, going by their past returns, you may have lost most of your gains in 2025 as many schemes delivered negative returns.
c) Chasing winners can be disastrous. For instance, most of the schemes that were top-performing in 2024 were nowhere on the scene in 2025. Therefore, it’s better to look for consistent performers, especially in mutual funds.
d) Chasing your goals is more peaceful than chasing more and more returns. Most investors get into market-linked products by seeing past returns. Some remain invested for more returns even if their initial expectations are met. However, this can lead to heavy losses in years like 2025 when many equity schemes delivered negative or very low returns.
So it is better to make a timely exit from high-risk equity schemes when your goals are met and look for ways to preserve your capital through less risky options in debt and hybrid categories.
2. Retirement in focus, but plan well now
With big changes in National Pension Pension (NPS) for both government and non-government subscribers, the need for retirement planning gained the spotlight in 2025. More so in view of the ever-rising cost of living.
While NPS looks set to emerge as a go-to option for many investors for retirement needs, one should understand it carefully before allocating too much.
The scheme is good in many ways, especially in terms of taxation and lower charges. However, you need not see it as a one-stop solution for all your retirement needs. There are several options for saving and investing. You need to find the right mix of options that will help you reach your goals.
The icing on the cake for retirement planning in 2025 was reforms in the Employees’ Provident Fund (EPF) rules. It is going to be much easier to withdraw from EPF now, compared to the past. Moreover, the tax rule changes announced in Budget 2025 have made life after retirement less stressful for senior citizens, especially those with normal incomes up to ₹12 lakh.
3. Buy vs rent debate got a new twist
Those in favour of renting have always argued that renting a house and investing the balance in your hands can help you save more in the long run, compared to buying a house on a home loan and paying interest to banks. However, such arguments do not care for three things:
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Rents keep increasing unchecked
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Returns from investments can stagnate in some years, as it happened with many equity mutual fund investors in 2025.
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Living in your own house is more peaceful than living in rented properties.
Decreasing home sales in 2025 means more demand for existing rental properties. This, in turn, can drive rents upwards. So if you pay more rent, you save less. Moreover, if the markets are not kind, you get lower returns on your investment. Such a situation makes the rent vs buy debate futile. What’s the way forward? You may ask.
Well, the ideal solution is to go by the classical saying: Buy when you can, and rent when you can’t buy. The year 2025 has made many investors believe more in this classical saying.
4. Positive news doesn’t always move the markets immediately
There were several positive news in 2025, especially from the government side, that should have driven markets higher, or so you would have thought. For instance, strong GDP growth, easing inflation, GST rate cuts and simplification, income tax slab changes, and infrastructure & local manufacturing push.
Yet markets moved sideways during most of 2025, driving home the point that news alone cannot push markets all the time. There has to be enough demand to push the markets higher, which may come either after a correction or if there is a fresh flow of money. And either of the two can happen in the future. This lesson from 2025 may help many investors plan better for their future.
5. Every market cycle can have a new hero
Gold and silver have emerged as heroes in the 2025 market cycle. For many investors, foreign investments also delivered good returns.
During most of 2024, Indian equity instruments were the heroes, while gold, silver and foreign investments were seen by many as tools for mere diversification.
Amid the gold and silver bull run of 2025, many so-called experts have started pushing gold, silver, and foreign investments among those seeking higher growth in the future. However, one should tread with caution and stay away from such experts as bull runs do not always last long.
The year 2025 has taught that every market cycle can have a new hero. So, while there is no harm in diversification, going heavy on any one instrument can be a recipe for disaster.
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Disclaimer: Views and opinions expressed in the article are the author’s own and do not reflect those of Upstox.