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Here's How Goal-Based Investing Helps Stay on Course

Essential questions are how much to invest, where to invest, and when to start investing. Goal-based investing is about aligning your investments to your goals. Read on to find out more.


Millennials find different ways to build wealth. Do you know what exactly you are saving for? Are your investments allocated strategically? If yes, your financial planning is right on track. If not, it's time to focus on your financial plans.

What is goal-based investing?

Goal-based investing is an investment strategy that uses financial instruments such as stocks, fixed deposits, mutual funds, public provident funds, real estate, etc., to work towards meeting your specific financial goals. For example, if your financial goals are to purchase a dream home or secure your retirement money, you choose investments that work towards meeting those goals.

Goals of investing

If you're wondering where to invest money, you will have to plan it based on your specific financial goals, the timeframe you want to achieve the goals and your risk appetite.

When you allocate your assets based on your financial goals, you have a clear, well-defined, and realistic plan to achieve success. When setting financial goals, it's essential to establish how and what you want your money to succeed.

Financial goals are often categorized as follows:

Short-term financial goals – These are goals you want to achieve within a year. For example, you are purchasing the latest phone or taking a trip abroad.

Medium-term financial goals – These are goals with a time between one and five years. For example, you are purchasing a home or buying a car.

Long-term financial goals – These are goals you wish to achieve beyond five years. For example, you are setting up a retirement corpus or a child's higher education.

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Here are the benefits of a goal-based investment strategy:

Purpose to investments

Identifying goals will help strategize and improve budgeting. That is beneficial in wealth creation. Setting goals supports investors to lead a financially disciplined life. When you have a clear picture of your financial goals, you can focus on money management to achieve financial success.

Investment management

Investors already know the time horizon and risk appetite with a goal-based investment plan, which helps allocate funds in appropriate asset classes. Investors are less affected by market movements and are less likely to make impulsive decisions when a financial plan is to follow.

Start early to achieve more

Like the saying, the early bird catches the worm, investors who take early opportunities will gain significant advantages. Identifying goals give investors a head start to build a sizeable corpus by regularly investing small sums of money.

Responsible spending

When you plan your finances and follow goal-based investing, investors know exactly how much money to set aside for savings and expenses. With a defined financial plan, you can spend enough money on entertainment or leisure brunches without feeling guilty about spending.

Financial Freedom

With specific financial goals and goal-based investing, the element of financial stress is much lower. It is an effective way of becoming financially independent as you know your preferential need and time bind your resources.

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Here's how to begin goal-based investing:

Evaluate money needed

Every investment is different and requires an additional sum of money. With a specific plan in mind, you can avoid the out-of-the-pocket expense and build wealth.

Calculate time frame

Planning how much you want to spend and when you want to spend will help your financial peace of mind. For example, if you know when you will retire, you can set aside a certain sum of money based on how much you want by the time you want it.

Consider present cost

Change is the only constant. If you are planning to purchase a plot of land after a year, an investor will have to analyze the current price of the site and estimate how much it would cost after a year. And a sizeable number of regular investments considering the inflation rate will keep track of the goal.

Estimate future cost

Financial planning is most effective when investors can speculate the cost of their goals in advance. For example, if you want to purchase gold, an element whose value primarily increases with time, you can consider investing in it based on the current and previous market trends.


Having a goal goes a long way. Go on, now. Plot the financial goals you want to achieve. Do your research on the available investment options that suit your personal goals. Then create a balanced portfolio that will help you build money to achieve financial success. If you have a systematic financial plan in place, you can start goal-based investing.

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