It’s a process which helps us in achieving multiple goals across our lifetime. There are some very common goals for basically everyone across all sections of society, like Retirement, Home, Children’s education, marriage, Estate planning etc. But except those everyone has their own specific needs, situations, expectations etc. In this process we try to define all the goals, quantifying them considering the economic conditions, like interest, inflation, income etc. Then design the investment plan best suited for your goals.

We all are familiar with the word “lakshya” . Because whenever we interact with anyone who is into education now, we generally tend to ask what they want to become in future, in short what’s their goal / lakshya in life. Because we all know that working aimlessly is like sailing in the ocean without a destination or wondering in forest.

So the point here is how many times we asked ourselves what’s the purpose of our savings and Investments, why we are doing all this. Or we are just investing because people around us are doing the same thing. It should not be like that, we should know how much we putting, where we are putting with what purpose.

Eighteen months back on the onset of the pandemic we faced many turbulences ,financial, psychological etc. On thing that was quite common to be noted was, many people withdrew from their regular investment process by redeeming or by stopping their Investments. One of the major reasons for that was most of them had the basic emergency plan. Which can be termed first step of financial planning. A lot of the investors neither had their investment plan, savings nor budget in place. So we witnessed that proper financial planning is required because life is uncertain it can take any turn any moment, thus for us and our loved ones following a proper planning is very essential.

As we have discussed earlier there are some universal goals. But again those common goals vary from person to person based on different life experiences and situations. So goal based planning is a completely personal process, it should be designed as per each individuals requirements and capabilities.

Apart from varying from person to person goals also vary from time to time. Our goals can vary according to our earnings, situations, health, family etc.

For example if someone intended to buy a home with ample investment amount, but after seeing the valuation, he bought it on loan then the planning would change. With each passing years some goals may be achieved and some may get amplified. Thus over the time our may not change completely but they surely will hover around them.

There are various kinds of financial goals in life. And the process we follow to achieve them is investing. Here we all know that investing feeds on compounding and the key to compounding is time. So we can differentiate our goals on the basis of time. Such as..
Ultra short term goals: within one year
Short term goals: within 1 to 3 years horizon
Medium term goals: Within 3 to 7 years horizon
Long term goals: more than 7 years time horizon

When we start earning, we should start following investment planning process as per different goals. If you have not done it till now and reading this, then now is the best time to start.
In short there is no age limit for anyone who is earning. Because our level of wealth varies from time to time. Like..early post education time, to early professional career, then a decade into our career, then on and on till we finally we transfer wealth as per our desire.

There are some common steps for financial planning process. Such as Setting goals. We should lay out our goals in different stages of life. We should estimate how much money we need for each goals considering different economic situations that can prevail around.
Budgeting. We should assess our income post tax, our expenses, assets, liabilities and then create our budget. Once we have a budget we can ascertain how much we can save and invest.
Our risk appetite…. this is one of the key steps because we need to take the right amount of risk to achieve our goals. Coz with too much risk we may lose our hard-earned money due to adverse situations. And if we take too little risk we may not be able to get enough returns for ourselves. Our risk appetite depends on various factors ie age, stage of life, financials, past experiences etc.

Asset allocation…risk and return are interrelated to a high degree. Different asset classes have different risk profiles. Like equities, gold, real estate, fixed income they all have their advantages and disadvantages. We should invest in them as per our risk capabilities and future requirements.

Investment plan…once we complete the previous steps the next part is to simply calculate how much we need to save and invest based on goal amount, time horizon and expected return based on the asset allocation.

Goal based planning is becoming more relevant because it is customized, more easily understood and is a dynamic process that can be adjusted due to external market factors as well as idiosyncratic factors that affects our life. Irrespective of a person’s age, sex, wealth each of us has our own goal and want to achieve them in our lifetime.

Previously while investing meant “how much returns will I get” when the question should have been “how will investment help me achieve my goals “.

Like the majority of Indian investors, we all invested because of…tax savings purpose, because someone we know is investing or because one of our relative or friend is an advisor or agent.

Yes all our goal based Investments needs to be tracked. Because all of us have both long term and short term goals. The goals are adjustable and its importance change as per the changes in our life. It’s like tracking your child’s progress, how is study going, the desired percentage or rank can be achieved with current growth or not. If not what needs to be done. If extra coaching classes are required, just similar to if extra investment is required or not for our goals and some other personal stuffs can be taken into consideration .

We know that discipline is essential for achieving financial or any success. It’s an emotional ability which helps us from getting distracted from our goals. It helps us to save and invest for our future. Helps us reduce our debts, and improve lifestyle in a sustainable way.