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1. Short-Term Goals A short-term goal is one which can be met in the next two to three years. Because you don’t have much time to achieve your goal, you’ll need an investment option that ensures the security of your money. For short-term goal-based mutual fund investing, go for debt mutual funds. They provide you with respectable short-term returns. Debt mutual funds invest in interest-bearing bonds or other securities, lowering the risk involved.
Mid-Term Goals Medium-term goals are those that can be met in three to eight years. Med-term goals provide you more options when it comes to investing. You could do an 80:20 combination of debt and equities mutual funds or stick with stock index mutual funds, if you’re willing to take some risk. Because investing in equity funds can be dangerous, diversifying your portfolio with debt mutual funds can help minimise the risk.
Long-Term Goals Long-term objectives are those that are more than 8 to 10 years in the future. You can afford to take risks here and go for goal-based investing in mutual funds, direct stocks, etc. Long-term goals include, among other things, building a retirement fund, investing for your children’s education, and beginning a business. You could try equity mutual funds or direct stocks (shares of particular firms) to get the appropriate amount to fulfil your goal. Although risky, equity investments are thought to be well suited for long-term aims.
3 Key Takeaways 1. Goal-based investing places your financial goals at the centre of your investment plan. 2. It helps you achieve your goals through planned investing and manage your wealth. 3. You can start investing based on your risk tolerance, needs and time period of your goals. You get a clear view of your finances by mapping out all of your requirements. Goal-based financial planning can help to determine how much to invest, where to invest, and when to begin investing. Furthermore, it provides you a reason to stay invested. And it helps you in fighting your worst adversary: recklessness.
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