5 guidelines to goal setting

A lot of times beginners in investing tend to struggle with financial goal setting, which happens to be a pre-requisite for building an investment portfolio.

How do I know which year I’d need the money in?

How do I define goals early on in life?

These are some of the many queries an investor might have. Another very common myth is that only beginners require goal setting. Well, no. Goal setting is a continuous process and also, requires a lot of iterations to the original plan. As life takes a new course every now and then, our aims/ambitions keep changing. Hence, it is always advisable to do a point-to-point check between the goals and the portfolio.

A commonly followed ideology is that of SMART goal setting. Let us deconstruct these 5 basic principles, hoping this will make it easier for you to align and realign your goals-

Specific Your goals need to be specific. Be it a short-term goal like buying a new car or a long-term goal like retirement. The more specific your goal is, the more likely you are to plan better and achieve it. For e.g. if you plan to take a prolonged vacation to Bali sometime in the next 5-6 years (mid-term goal), the questions you need to ask are-

Who all will go? What will be my expense?

Will this be a luxury trip or a budget trip?

If you know you’d need approximately 4 Lakhs next year for your trip, you may save as below-

If you do this exercise for every goal, you are bound to have a better corpus for it.

Measurable Keep the goals measurable. The milestones on the way to achieving the goal should also be measurable. For e.g. if your plan is to start your own company in a decade’s time. What are the skills required to get there? What is the seed capital that you will require? This helps in better tracking of the goals.

Achievable Needless to say, your goals need to be attainable. Let them be realistic. For e.g. You need to ask yourself if it is realistically possible for you to start your own company in another 10 years. Or would it take 15 years? It is pointless to slog and work towards a goal that spoils your present and is not practical in nature.

For example, if the corpus required to start your company is 1 Cr, there are 2 investment routes you can follow-

Hence you have to see that your goal is attainable, is it possible for you to set aside Rs 40,000 per month along with the other day to day expenses?

Relevant Your goals need to be relevant to you, your future and your lifestyle. You need to be able to tell what exactly this goal does for you in life. For e.g. Is that vacation to Bali relevant to your stage of life? Or is creating a down payment towards your dream house is more important? Are you in the right place to be making this trip?

Time-bound Each goal needs to have an end-date. This gives you a deadline and motivation to work towards it. Also, it will help you prioritize some goals of others. This comes in handy while revisiting the goals set at regular intervals.

It is entirely normal to wrongly gauge your goal-setting timelines and purposes, that is why it becomes all the more relevant to iterate and deliberate. If you require assistance with marrying your goals to the right kind of investment portfolio, please feel free to contact the financial advisors at WealthApp. Our expertise will not disappoint you.

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