Have You Set Your Financial Goals?
Posted: Mar 19, 2018
Have you set financial goals for yourself? If not, it’s about time you do it. Mere disciplined and the timely investment will not do the trick, you have to set financial goals too. The idea of financial goals can be defined in bullet points like a house, children's education, retirement funds, etc. but it has a much broader meaning.
Financial planning is a long-term process and most importantly a recurring process which needs to reviewed periodically. So what are the key components of financial planning and how does one go about it? Here is a brief overview of the concept and few essentials which every investor should follow in his/her financial planning.
Types Of Financial Goals
Your financial goals have to be set according to your priorities. It simply means things which are absolutely important like children's education and retirement funds should be given more importance while goals like vacation, car or home refurbishment, which are needed but not important, should be given second priority.
Once you compartmentalise your goals in the order of priority it will become easier to identify the investment instruments to meet your goals. It is important that you make right investment choices as it is a long term process and once you set your plan in motion, barring few minor changes, there shouldn't be any major changes which will hamper your long-term growth prospects.
Timelines For Your Financial Goals
One of the most important aspects of financial planning is defining the timelines of each financial goal. Not only does it make your planning more efficient but also makes it more focused and disciplined. For example, saving for a car will have a timeline for 2-3 years while saving for retirement fund will have a timeline of 25-30 years.
Once you get the timeline right, it becomes easier to navigate in terms of investment instruments and money management. For excellent results, always have realistic and achievable timelines. It's important that your financial goal, financial instrument and time are in perfect sync.
Instruments To Meet Your Financial Goals
This is the most import part of your financial planning. The decisions you make will determine the fate of your goals. If you play smart you will meet your goals comfortably and might also have some surplus. However, if you make wrong choices, you will only have regret. So let's shed some light on the investment mediums which you can opt for. Mutual funds, ELSS, PPF and direct equity investment are some of the investment mediums which can give you good returns.
There are many people who confuse insurance for an investment instrument. Insurance is just a risk cover. It is meant to safeguard you from unforeseen events of the future. Looking at insurance as an investing medium is the biggest blunder of investment planning.
Your best bet to meet your short-term and Long term Investment goals is to invest in mutual fund (debt and equity funds) and direct equity investment (stock market). These two investment instruments will give you both safety and growth. There are various long-term stocks which will be perfect for you to build your post-retirement corpus while a combination of mutual funds and short-term stocks can come in handy to meet your short-term goals.
As Stock Investment is a complex matter, it always pays to opt for either stock advisory firms or portfolio management firms. Their expertise can take you a long way in your investment.
It's important to set financial goals but it's more important to make the right investment choices and strike a perfect balance between investment mediums and their timelines. Remember, you are planning for your life and for you children's lives, and you have plenty of time to get the best results. Buying long-term shares and investing good mutual fund can do wonders to your planning. If you do that, all your financial goals would be met in a due course.
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