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Goal-based investing involves defining your financial objectives, creating a timeline for each one, and investing frequently in order to achieve them. As a result, you effectively give all of your dreams and financial goals a chance.
Goal-based investment planning is different from traditional investing. In the former, an investor’s success is measured by how efficiently he or she achieves personal life goals rather than how well their investments perform in the market average over time. So you’re not competing with the market in this race, but you’re running it for yourself.
Ideally you will have to calculate your monthly expenses and multiply it by at least 6. That’s the ideal amount of money you should be saving up for your emergency fund. You can do this by putting your money in fixed deposits and liquid funds, investing in SIPs, stocks and start-ups, depending on your risk appetite, investment objective, term of investment, and other factors.
Now, coming to the investment objective, let’s explain it through an example again. Let’s say your GBI (goal-based investment) is saving up for education for your children’s future. Ideally you’ll need to start when your child is young. You can start by monthly SIPs (systematic investment plan) in mutual funds and stocks.
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