Everyone aspires to achieve something significant in life. These aspirations vary from person to person, such as travelling to dream destinations, buying a car or a house, or covering children’s education expenses. Some people also plan for their retirement. However, simply dreaming isn’t enough. It’s crucial to plan thoughtfully and save regularly. Moreover, investing in the right avenues is equally important. In such cases, goal-based savings can be your greatest ally.
You can invest in property, mutual funds, gold, etc. While withdrawing the money, consider inflation and the time needed to achieve each goal. These two factors will determine how much you need to save. Once you set your goal, calculate the amount required to achieve it. To understand this, you will need to identify inflation and the time taken to achieve each goal.
Focus on Goal-Based Investment Schemes
Policybazaar’s Head of Investment, Vivek Jain, suggests focusing on goal-based investment schemes for various financial objectives. Whether it’s buying your dream home, saving for your child’s education, or planning retirement, goal-based investments can help. For instance, if you start saving ₹20,000 monthly at the age of 35 and continue for 25 years with an average market-linked return of 12%, you could accumulate up to ₹3.8 crore for retirement.
Key Points for Goal-Based Investments
Identify Your Goals and Set Priorities
Begin by listing all your financial goals. Then, prioritize them based on their importance and urgency. This will help you allocate your money effectively and decide where to invest.
Calculate the Amount Required for Your Goal
Next, determine how much money you will need to achieve your goals. It’s important to understand the actual amount required for each goal. You need to consider two factors: inflation and the time required to reach your target.
Make the Right Investment According to Your Target
Based on the time required to achieve each target and the risk involved, you should invest your money in different avenues. Low-risk investments are suitable for short-term goals, while you can take on slightly more risk for long-term goals.
Choose the Right Investment Method for the Goal
It’s beneficial to invest in different ways for each of your goals. For short-term goals, consider low-risk options like fixed deposits, short-term bonds, or liquid funds. For long-term goals, you can afford to take a bit more risk by investing in stocks, mutual funds, or ETFs.
Regularly Review and Rebalance
Periodically review your goals and investments. Rebalance your portfolio as needed to ensure your money is aligned with your changing goals and risk tolerance.
Automatic Investment
Set up an automatic transfer from your salary to your investment account. This ensures continuous investment towards your goal without needing to think about it each time.
Be Disciplined with Investments
Discipline is key when it comes to investment planning. Invest as soon as you receive your salary, and avoid making emotional decisions based on market fluctuations that could jeopardize your long-term financial goals.
Keep an Eye on Investments
Be focused on your investments. Regularly monitor how your investments are performing concerning your goals. If necessary, adjust your investment amount or strategy to stay on track.
Seek Expert Advice If Needed
If you’re unsure about what to do or where to invest, consider consulting a financial advisor. They can help you create a tailored investment plan based on your goals and risk tolerance.