scorecardresearchGoal-based investing: The best way to achieve your life goals

Goal-based investing: The best way to achieve your life goals

Updated: 16 Dec 2022, 11:25 AM IST

Investing has a sole purpose, achieving what you have planned for yourself and your family in financial terms. In this article, we will find out everything about goal-based investing to reach your goals.

Goal-based investing

Goal-based investing

If you meet any finance-centric person, they will always advise you to start investing keeping a goal in your mind. Keeping a financial goal in your mind helps you in being consistent with your investment and availing compounding benefits from the markets. Earlier, making the investment was necessary and you were able to cover your expenses with one or two investments.

But, these days, education, healthcare, weddings, everything is hiking at a speed that you cannot catch with your single investment. You have to make goal-based multiple investments. Let’s understand everything about goal-based investing.

What is goal-based investing?

You must have several financial goals in your mind to achieve, these goals can be categorised into short-term, long-term, and medium-term. A consistent investment strategy will help you in achieving your particular financial objectives, such a way of investment is known as goal based investing.

Let’s understand with an example:

If you are planning to buy a car by the end of 3 years, you started a SIP of 10,000 to buy your favourite car. Such an investment is known as a short-term investment. Here your short-term goal is to buy a car.

How to strategize your investment?

First, you need to pick up the first financial objective you wish to achieve through a particular investment in a given period of time. Then a time horizon under which you want to achieve such a financial goal. Now, apply inflation to the current cost of achieving your financial objective and you know the future value of your goal.

For example, if you are willing to give the utmost quality of higher education, the best college fee nowadays is 20 lakhs and the prevailing & expected inflation rate is 6% approximately. Your child is now 10 years old and the age at which your child can start higher education is when he/she is 20 years old. The future cost after 10 years is 36 lakhs.

Corpus needed - 36 lakhs

Time horizon- long term (10 years)

Goal- a child’s higher education

Already saved among- zero

If you start investing via a SIP, you need to invest at least 3.6 lakhs (36/10)

This is how your investment strategy should look like when you prefer goal based investing.

Available investment options

There are various options available, a few of them are as follows:

The most famous option for starting goal based investing is investing through SIP, as they provide a portfolio already according to your objective, risk appetite, and time horizon.

If you are looking forward to investing in a particular sector and see ecstatic returns in your investment tenure, then you can go for index funds. For example, BSE PSU banks index, Nifty bank, etc.

If you have knowledge of the stock market, you can create your own portfolio according to trends in the stock market.

Goal-based investing is an interesting way to invest in your dreams and see them come true. However, it is necessary to understand your own risk appetite, and if you're making a market-linked investment, be patient with the economic situation. If patience is not practised, your goal might be compromised.

Anushka Trivedi is a freelance financial content writer. She can be reached at

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First Published: 16 Dec 2022, 11:25 AM IST