Goal Based Investing

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Do you have any financial goals that you wish to achieve in the short, medium, and long term period? If yes, then you must be planning hard to reach those goals, isn’t it. But what if you would be able to meet them easily? Wondering how? It is possible with the strategic plans for Goal Based Investing. 

Each person has a different goal, like having a new house, marriage, retirement, etc. To achieve those goals, each one tries different methods. One of those methods is Goal based Investing.

Goal Based Investing refers to a fund-specific strategy that involves investing regularly so that an individual can reach the respective financial goal. This strategy helps you to achieve all types of financial objectives in a specific time frame. 

Goal Based Investing India

In India, the main focus of investors is to meet their different goals whether it is children’s marriage and education, foreign holiday with family, paying any installments, or buying an asset. 

Well, to achieve any of these goals, one must have an adequate amount of money. As it is true, when you make a profit, you can fulfill your goals. 

If you also have any of these goals? There are several different ways like, you can deposit your money in a bank or you can also invest in stock and many other goal-driven schemes.

They all make sure that the funds you will need in the future must be available to you at the right time. If you have tried them and still have a shortage of money. Do not worry!! 

You can choose one of the most popular investments known as Mutual funds. It is one of the safest, easiest, and convenient ways of making profitable and successful investments.

If you are looking for an investment that can bear you profits, you can subscribe to IIFL NCD and reap its benefits before it closes.

Besides, for getting good returns in mutual funds, you can use the most effective technique – “Goal-Based Investing”. It is also known by another name i.e. Goal-Driven Investing. 

Goal-based investing is one of those new investment techniques or you can say a long-term investment plan that is gaining popularity among investors. 

There are numerous reasons for this strategy to be in demand nowadays. 

As Goals define time frame, time frame defines risk profile and risk profile defines which mutual fund investment one should choose to invest. 

So, the work of this strategy is to provide you clarity of your goals, save you from debts, and help you to manage your investments. It increases your attention to your life goals and you can easily achieve them. 

Not only this, with the help of Goal-based investing you can achieve good returns even by investing moderately and regularly. 


Goal Based Investment Planning 

After getting a short idea as to what Goal based Investing is. Now you must be wondering how you can achieve your financial goals using Goal Based Investment Planning? 

For this, firstly, you need to know the different financial goals that you wish to achieve and then you need to figure out in what time period you have to accomplish those objectives. 

Once you are done with – Nature of your goals and Time period. You can evaluate the present cost and future cost of your financial goal.

It is sure, that you already know the present value of your goal but now you have to know its future value. For this, you can use the inflation to your present cost.


To illustrate more ▶️ Suppose your future goal is to buy a car that is for Rs. 20 Lakhs after 10 years. The present value of your car (future goal) is Rs. 20 Lakhs. 

Let us assume that the average annual inflation rate is 6%. The future goal value would be approximately 36 lakhs. The future value of your financial goal i.e. Car is Rs. 36 Lakhs.

So now you need to plan investments for Rs. 36 lakhs not for Rs. 20 lakhs. 

Suppose, you do not have that much money. So what can you do? You can deposit your money in a bank, but the fixed deposits option is not that useful as it does not offer you greater returns.

The second option you have is stock investment, but the price of stocks are highly volatile. 


So what best you can do is to invest in Mutual Funds. Although mutual funds investment involves risks too but you can offer you good returns on investment when planning and picking schemes and plans strategically. 

There are various investment options where you can use Goal-Based Investing. But if you use this strategy for mutual funds, it will give you higher returns. You can initiate your goals by following the simple steps discussed below.


Identification of Goals

The first step is the most important one to identify your goals and the relative timeline for them. It also helps you divide your goals into three categories- short term, midterm, and long term. 

Suppose, you plan to buy a car in the next 2 to 3 years, it can be your short-term goal. On the other hand, if your goals are like retirement and children’s higher education, they can be termed as long-term goals. 

Besides, paying a down payment on a house or starting a business, these are your mid-term or medium financial goals. 


Measurement of Goals

Once you are done with the first step, i.e. Identification of your goals, then you need to find out how much it is going to cost for your goal. 

Suppose, you want to invest in equity, then check out how much money you should invest in that particular security so that you can achieve your identified goal.

Keep in mind your lifestyle and add the inflation rate before finalizing the final cost, and you are done with the second step. 


Figure Out Your Saved Money 

Now, the third step is to find out how much you have already saved to meet your financial goals. You can also take help from a financial advisor to consolidate all your investments and holding to see how much you have saved if you are not able to structure your investments. 


Check Out Money You Need More 

The fourth step is to find out how much more you should save to meet your financial goals. Based on your risk appetite & inflation rate, the investment returns always differ.

You need to remember that the decrease or increase in investment can also vary in the future.


Choose Investment Instrument

Moving forward, you have the next point, choosing your investment instrument. There are mainly four types of mutual funds namely, Equity Funds, Debt funds, Hybrid funds, and ELSS mutual funds.

You can invest in anyone as per your needs and convenience. 

  • Equity Funds – Ideal one if you are planning to invest for 5 years or more than that. 
  • Debt – Debt is an ideal investment for short-term and medium-term goals.
  • Hybrid Funds – Hybrid aggressive funds investment is ideal if you have a moderate risk profile and you want to invest for the long term. 
  • ELSS Mutual Funds – You can invest in ELSS mutual funds if you have to achieve your tax planning goals. 

It is time to build your portfolio, selecting the right investment instrument to achieve the financial goals. You can go for RankMF to perform the same task. 


Goal Based Investing Research 

Goal-Based Investing Research is conducted by experienced wealth managers and investment firm’s clients. It involves checking the progress of the Goal-Based Investing strategy and how much it has supported in achieving the specific life goals.  

Goal-based investing is better because it is a SMART (specific, measurable, attainable, relevant, and time-bound) method to invest. These aspects have been discussed below:

  • Specific: Being specific and realistic with your goals and the passion for achieving them can help you invest in better options. This could mean saving for a new house, your marriage, your retirement, etc.
  • Measurable: Calculate the amount you require to achieve that goal, keeping in mind the inflation rate.

For example ▶️ If your children’s education costs Rs.20 lakhs today, at a 6% inflation rate, then it would cost Rs.27.90 lakh in the upcoming 10 years. You have to save accordingly per month, then, keeping in mind the annual growth rate.


  • Attainable: When the two steps are complete now, it’s essential to match your goals with the investment option to reach your goals within the given time. But don’t forget about your risk appetite while going for investment options.
  • Relevant: Once you have set your goals and worked towards them, it’s time for you to track your investments and make sure your goals still make sense. If it is not, then it is time to make some adjustments to your portfolio.
  • Time-bound: Do not try to exaggerate the time frame for your goals. Keep it realistic, which you can achieve. This will help you to be on track. A little bit of increase or decrease in your monthly savings is okay.

Goal Based Investing In Mutual Funds

When you invest in mutual funds, your funds are collected and then invested by mutual fund managers (experts) in different stocks and debt instruments.

Here, you can get good returns and eventually create wealth to meet your goals. 

Although, you can directly invest in stocks and debts as well. But investing in individual stocks is more volatile and too risky. 

On the other hand, in mutual funds investment, you invest in multiple stocks this means if the stock falls and it may get compensated by the other which makes it less risky as compared to just investing in stocks and debts. 

When it comes to investing in mutual funds, investors have to analyze various parameters like financial goals, return, risk tolerance, and investment horizon. 

So to make this task less challenging, here are relatively new goal-based investing tools that involve RankMF Baskets. 


Goal Based Investing App

There are so many goal-based investing apps in the market, but we will only talk about the RankMF Baskets in this section.

RankMF is an excellent and easy to use platform launched by SAMCO Group where you can evaluate the mutual funds across various segments. 

Try your mutual fund’s investment with RankMF Baskets. Wondering how this basket can help you in accomplishing your goal based investment, then go through some of the top benefits you can avail yourself with it. 

  1. RankMF provides you superior mutual fund research to make sure you don’t invest in the wrong mutual funds.
  2. At RankMF you can upload your CAS and evaluate your existing mutual fund portfolio to check if you are investing in the right funds or investing in poor quality funds. And based on that switch your investment to quality mutual funds to achieve your goals.
  3. Achieve your goals faster by generating additional returns from your mutual fund’s investment with RankMF’s SmartSIP in more than 300 mutual fund schemes.
  4. Invest in the best mutual fund with expert-curated RankMF Baskets, specially designed to help you achieve your financial goals in a specific time horizon, depending upon your risk appetite.
  • You can choose expert-selected baskets of mutual funds for your financial goals, like children’s education, buying a car, paying a down payment on a house, saving tax, and much more.
  • RankMF experts or specialists monitor mutual funds in the basket very closely. This ensures you achieve your goals efficiently and quickly.
  • Invest in a RankMF basket in just three simple steps: 

⊳ Choose a goal.  

⊳ Pick a basket that suits your goal.

⊳ Invest and see your basket grow. 

RankMF is a next-generation mutual fund investment app that helps investors to compare, choose and invest in mutual funds, and also assists them in making a better investment decision. !

Download the RankMF app from the play store or app store. The next thing you have to do is to log in to RankMF by putting an Email and password. Now you can choose, invest, and manage your mutual fund investments on the go! 


Conclusion

In the end, we can conclude that goal based investing is all about discipline, determination, and data. Goal Based Investing does not react as per market but your goals because you take risks on your own.

Always remember it’s important to have the right mindset to achieve your long-term investment goals.

Goal based investing prevents you from making bad errors because of any rookie mistake, you have to suffer to meet your long-term goals. And that’s not what you might want!

Besides, you can use the RankMF app for gaining higher returns and preventing losses in mutual fund investment. You can explore and make comparisons in various mutual fund schemes after checking their performances and results.

To use this exciting app, you need to open a DEMAT with SAMCO.

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