We all invest our money so we can grow it, but how many of us have actually invested based on the goals we wish to achieve?
Goal Based Investing involves investing according to your determined life goals, like saving for your children’s education or amassing a retirement corpus, rather than focusing on generating the highest portfolio returns.
Take a pen and paper and list down the goals you wish to invest in and earn for.
Before we start, here is a video on Mutual Funds explained: [ Ссылка ]
Let's first categorize them based on their time period.
Short-term goals usually have a horizon from a few days to a two year time horizon. These goals could be a holiday, buying a new vehicle, or any similar type of purchase.
Medium-term goals have a three-to-five year time horizon. Examples of these goals could be to pay off a loan, or save up for your children's college funds.
Long-term goals have a longer time horizon - anywhere between five years to even thirty years. It may be out of sight, but definitely should not be out of mind. Saving up for your retirement corpus is a long-term investment goal.
Always remember to set goals that are SMART (Specific, Measurable, Achievable, Realistic and Time-based) to achieve the best results.
Now, what type of funds are the best option for each of your goals?
Equity funds, Hybrid funds or Debt funds - which type of fund is appropriate for your goal?
Let’s start with a simple way to understand each of these funds and how you could invest in them according to the Goal Based Investing approach:
Equity Funds: Through these funds, you can buy ownership into businesses in the form of publicly traded stocks.
Hybrid Funds: They are mutual funds that provide a combination of more than one underlying investment security, such as stocks, bonds or cash.
Debt Funds: A debt fund invests in interest generating securities like corporate bonds, government securities, treasury bills, commercial papers and other money market instruments.
Watch the video to find out more before you start your goal based financial planning!
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