Description

Goal-Based Financial Planning Process “ A GOAL WITHOUT A PLAN IS JUST A WISH” The road to your financial goals requires a map in the form of an investment process. Goal Based Investing We all have dreams and desires, but most of us do not plan our investments according to our goals. Whether it is for child’s education or marriage, retirement planning, tax savings, dream car, house or vacation, you need to plan for future requirement. Goal based investing adds direction to an investment. It is a structured, well thought out process for investing, where you know the purpose behind each rupee that is being invested. In Goal based investing, performance is measured by the success of investments in meeting an individual’s personal and lifestyle goals. Plan for your SMART Goals The following are different types of goals. The below list is indicative and depends on life stage and ambitions of each individual. Short-term: Has a time frame of few months to couple of years. It covers immediate goals such as going for foreign vacation. Mid-term: Involves a time frame from one to five years. Midterm goals include buying a car or starting a business. Long-term: Involves plans that are more than five years. It includes goals such as retirement or child’s education or marriage. For instance, “I wish to accumulate Rs 25 lakh by 2025 to fund my kid’s higher education” is an example of a SMART goal. Also consider inflation, while computing the future value of your goals. Assuming the current cost of funding your daughter’s education is Rs 5 lakh. After five years, you would require Rs 6.38 lakh, assuming an inflation rate of 5%. Hence, you should work with your financial advisor review your goals, say annually and update for any major life changes. 1. Define Goals 2. Financial Plan creation 3. Financial Plan Execution 4. Our approach to Goal based financial planning 5. Holistic view of Portfolio