As the New Year 2026 kicks off in a couple of days, it is vital to be aware of the timeless personal finance rules. From the phenomenon of asset allocation and portfolio rebalancing to rupee cost averaging, retail investors are often advised to follow some of these tried-and-tested rules to maximise their investment returns.
Before moving to the next year, let us first take a look at how this year turned out. While gold was literally the talk of the town after having delivered stupendous returns in 2025 (80%), equity markets demonstrated extreme volatility during the current calendar year.
“Retail investors have experienced significant volatility in the Indian equity market, while overseas markets and commodities have provided reasonable returns this year,” said Preeti Zende, founder of Apna Dhan Financial Services.
Follow these personal finance rules in 2026
I. Asset allocation: Experts often point out that the divine rule of personal finance is asset allocation, which effectively means to allocate your savings across different assets such as equity, debt, real estate and gold, among others, in a pre-defined ratio.
“Those who adhere to a well-structured asset allocation strategy according to their financial goals can navigate through fluctuations in asset classes and achieve a positive portfolio return. Relying solely on one asset class can be detrimental. Many retail investors chase current trends in an attempt to maximise their returns, but assets that are already at high levels may take time to recover. In the pursuit of higher returns, investors may end up facing losses,” said Zende.
II. Allocation to gold: As mentioned above, there should be some allocation to precious metals such as silver and gold. But given the spike in gold prices in 2025, it is not advisable to allocate a disproportionately higher proportion of your asset portfolio to gold as a knee-jerk reaction.
“The ideal allocation to gold is 10%. There have been periods in recent history when gold prices did not rise beyond 4%. So, it is not recommended to go overboard on precious metals, including gold,” said Sridharan S, founder of Wealth Ladder Direct.
III. Emergency fund: Regardless of how much money you invest, there should be some money locked in the emergency fund. This is another personal finance principle that you should avoid violating.
IV. Passive investing: Between active vs passive, retail investors could choose the option based on their risk appetite. Those with a higher risk appetite may opt for active mutual funds, while conservative investors are encouraged to invest in the passive schemes.
Index mutual funds, such as the Nifty Mid-Cap or Nifty 100, are passive schemes that track the returns generated by the indices, providing a sense of financial safety in the minds of investors.
V. Rupee cost averaging via SIPs: Another personal finance rule that investors are encouraged to follow is the rupee cost averaging. Designed on the lines of dollar cost averaging, this rule states that investment made at different price points maximises the chances of earning higher returns.
This is best done by investing via a Systematic Investment Plan (SIP).
VI. Benefits of investing in mutual funds: As a retail investor, exposure to equity could be risky. It is, therefore, highly recommended to invest in mutual funds instead of direct stocks. Lately, retail investors’ exposure to equity funds has significantly increased.
VII. IPOs & NFOs: While an Initial Public Offer (IPO) may offer an opportunity to invest in a company at the start of its journey post-listing, the same opportunity is not typically available in the case of mutual funds. When a new scheme is offered via a New Fund Offer (NFO), you don’t get any benefit of a special price. You could still invest in a mutual scheme any day after its offer without any noticeable change in its price.
VIII. Retirement goals: It is worth noting that investment across asset classes is aimed at meeting financial goals such as retirement. Whenever you make an investment, ensure that it helps you move closer to your financial goals.
IX. Investing for tax purposes: Some investors invest purely for the purpose of saving their taxes. With the new tax regime in force, most of these savings instruments, such as NSC, PPF, SCSS and KVP, no longer offer tax savings. However, the income they generate is still tax-free.
Read this Livemint article for details.
Therefore, it makes sense to invest in these instruments regardless of whether they offer tax benefits or not.
X. Getting insurance: Another dilemma which investors face is whether to view an insurance plan as an investment instrument or purely as a term plan. It is recommended to consider insurance separately from your investments.
For all personal finance updates, visit here
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
