Know How Goal-Based Investments Boost Your Wealth Creation

Each and every one of us has a set of needs and aspirations. The fulfillment of these needs requires a solid commitment. But we must monetarily provide for this commitment. This is nothing but creating a financial goal. Instead of investing in an unsystematic manner, a well-defined goal-based investment strategy will help you boost your wealth so you can achieve all your wants within a set time frame.Here’s a list of reasons why goal-based investment is important.

1. To quantify your needs Needs and aspirations may be abstract in nature. Setting a concrete financial goal will help you define the amount of money required to fund your needs. A financial goal will encourage you to fulfill your wants and not let your goals remain unaccomplished dreams.For example, you may wish for your child to be educated abroad. A goal-based strategy shall enable you to understand the current value of costs associated with higher-education abroad. You can then adjust this figure for inflation and arrive at a realistic number which shall represent the future value of your goal. This helps you realize how much you money you need to start setting aside towards this goal.
2. To fulfill your wants in a timely manner It is not very difficult to achieve financial goals as long as one is disciplined. The main task is to achieve them on time and not at the cost of other important responsibilities. Financial goals come with a strict deadline. Investments must be structured keeping a horizon in mind, otherwise, the entire point of saving and investing is lost.
3. To achieve your goals without borrowing money Credit is easily available in today’s times. Moreover, banks and financial institutions have started offering loans at attractive interest rates to gain a competitive advantage. It may seem tempting to fulfill immediate requirements by borrowing money. However, piling up loans just because they are easily available and provide us with a shortcut to fulfilling our goals isn’t the most prudent step.This route turns out to be more expensive. A poor repayment history can negatively impact your credit rating, which shall have a consequence on your creditworthiness. Fulfilling your goals with your hard-earned money and savings will pave your way towards financial freedom.
4. To monitor your progress If your investments are linked to specific goals, you can track the progress of your goal effectively. The estimated time required to fulfill your goal will depend on the amount of money invested and the rate of return of your investment. You can also identify which investments are not performing as per expectations and switch to other suitable investment avenues.

In Conclusion Financial planning is a planned and systematic approach to provide for the financial goals that will help people realize their needs and aspirations, and be happy. The financial goals must be defined in terms of time-horizon and the amount of money required to fund the goal.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.