REPOST: Goal-based investing and its benefits
When investing, it's always best to assign specific goals to each investment account. Goal-based investing provides direction to your money. Read more on Business Today:
We all have dreams and desires but we do not plan our investments according to our goals, most people just invest in an unplanned manner. Goal based investing adds direction to an investment. A structured, well thought out process for investing, where you know the purpose behind each rupee that is being invested is known as goal based investing. It looks at your existing assets, expense patterns, risk profile, asset allocation and the various short, long and medium-term goals and creates a road map for each of these goals in a fairly predictable manner.
It comprises of two parts - planning & investing. Goal planning notifies the amount that is required to fund the goal and the how much is needed to invest regularly or one-time to get to the desired amount. Investing that amount in the most suitable product helps to achieve the goal without any difficulty.
Getting the best out of goal-based investing
Determine and analyze your current financial situation and then set goals. This activity involves in understanding what you want to do with your money and how you want your financial future to look like. Goal based planning is set in three time frames; short-term, mid-term and long-term.
Short-term: Has a time frame of few months to one year. It covers immediate goals such as buying a car or going for foreign vacation in the near future.
Mid-term: Involves a time frame from one to five years. Midterm goals include buying a house or starting a business in 3-5 years down the line.
Long-term: Involves plans that are more than five years off. It includes goals such as retirement or child education.
Continue reading HERE.
"The opinions expressed in this re-posted article are not necessarily the views of LOM, but are presented to provide a broad spectrum on financial matters."
We all have dreams and desires but we do not plan our investments according to our goals, most people just invest in an unplanned manner. Goal based investing adds direction to an investment. A structured, well thought out process for investing, where you know the purpose behind each rupee that is being invested is known as goal based investing. It looks at your existing assets, expense patterns, risk profile, asset allocation and the various short, long and medium-term goals and creates a road map for each of these goals in a fairly predictable manner.
It comprises of two parts - planning & investing. Goal planning notifies the amount that is required to fund the goal and the how much is needed to invest regularly or one-time to get to the desired amount. Investing that amount in the most suitable product helps to achieve the goal without any difficulty.
Getting the best out of goal-based investing
Determine and analyze your current financial situation and then set goals. This activity involves in understanding what you want to do with your money and how you want your financial future to look like. Goal based planning is set in three time frames; short-term, mid-term and long-term.
Short-term: Has a time frame of few months to one year. It covers immediate goals such as buying a car or going for foreign vacation in the near future.
Mid-term: Involves a time frame from one to five years. Midterm goals include buying a house or starting a business in 3-5 years down the line.
Long-term: Involves plans that are more than five years off. It includes goals such as retirement or child education.
Continue reading HERE.
"The opinions expressed in this re-posted article are not necessarily the views of LOM, but are presented to provide a broad spectrum on financial matters."
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