4. What is Goal-based Investing?
Investing can either be general or directed toward achieving a specific goal. A goal can be anything from purchasing your dream house, paying for your child’s education, funding an expensive treatment to going on a vacation, starting your own business or planning for your retirement. Here are the steps you should follow for investing for the purpose of achieving your goal(s):
- You can commit to invest only if you feel motivated to do it in the first place. Are you saving to pay for the down payment of your dream house? Before doing it, think about why it is important and if it’s worth committing to. A clear purpose for investing assists you in setting the right goals.
- While the time horizon for your goals may vary based on your personal and financial circumstances, here is how it may look like:
Short-term Goals Mid-term Goals Long-term Goals Wedding expenses Buy a house Open a new business Vacation Buy a car Plan your retirement Save taxes Save for college Financial legacy for family
- You can’t decide to invest Rs. 1000 every month when you barely meet your monthly expenses. Financial instruments can be risky and there are chances you lose your money. Therefore, consider your financial circumstances before going down this path.