Goal-Based Investing – 3 Reasons Why It Is the Best for You

If you have been reading all about mutual funds in the recent times, you might also have heard the terms “goals” or “goal-based investing”. Have you ever wondered what this goal based investing is all about? 

In simpler terms, goal-based investing is just an act of saving a part of your earnings towards a life-goal like your kid's education, your retirement or to buy a house. Any investor can do this by investing in various kinds of mutual funds. 

But is investing in mutual funds right for you? Let us look at the 3 reasons why you need to buy direct mutual fund online. 

1) Provides the investor with a clear finishing line


Whenever we start to invest for a particular goal, we give a deadline to ourselves to achieve the same. Be it our retirement or buying a house or a car, it is important to have a rough timeline set along with the target amount required to achieve the goals. 

So, when you start with a goal, you already have your deadline – so, you know how within the time you have to build that wealth to fulfill your dream. Secondly, you know the target amount required to fulfill the goal and hence you can plan your investment wisely. 

2) Helps to select the best funds that suit your needs


Knowing the time frame to achieve your goal is one added advantage. Do you know why? Well, it will certainly help you in choosing the right mutual fund scheme by thoroughly analyzing the pros and cons. 

The mutual fund selection can be based on the time frame you have set for yourself and the risk you are willing to take. For example, you wish to buy a car in the next three years; it is your short-term goal. You can choose to invest in debt mutual funds, which provide low returns but have a low risk as well. 

3) Helps you make the right investment


Most of us invest without a goal in mind and this is one of the reasons why we end up with a lesser amount that we actually require when the time arises. By identifying your goals, and by knowing the approximate amount, you would need to achieve them, you are investing for what you would need in the future. This way you are on the right track to meet all the set goals. 

Remember that goal based investing is not a new fad; instead, it is one important concept that can help you build all the wealth you require. So, start your goal planning right away!

Comments

Post a Comment

Popular posts from this blog

Mistakes You Need to Avoid When Diversifying Your Mutual Fund Portfolio

Selecting the right assets to diversify your mutual fund portfolio can be quite tricky. You not only need to consider the returns but also need to analyze the risk factors and know if it fits perfectly with your financial goals.  Have you ever asked yourself as to what is the basic tenet of managing mutual fund investments? Well, it’s diversification.  Investors can add different types of investments to their portfolio to prevent a tandem movement of the overall returns. During volatile market conditions, the low returns from one asset can be easily cushioned with the high returns obtained by another.  In simpler terms, spreading your hard earned money into different assets provides risk-reduction benefits. But, when diversification plays an important role in managing your portfolio, it is also important to choose the right assets that match with your goals. This being a very comprehensive task, there are chances for certain errors. Mentioned below are some of the mis
Read more

Decoding Sip Investments

Money can act as the biggest motivator for many of us. In today’s electronic world, most of the money exists only on the papers and many of us wish to see an amazing figure under the head that reads “bank balance”. Well, SIP investments, when smartly planned can give investors enough reasons to save and save more to emerge successful in life’s financial battle. Even investment advisors know the fact that different people have different instincts and this might be the reason for having a myriad number of SIP plans, to suit the needs of every kind of investor.  Some of the kinds of SIP investments are mentioned below: The Growth Plans: Investors under the growth plans can choose to invest a particular amount in SIP month on month and it keeps on accumulating. The growth of the investment in such plans depends on the percentage of the debt and the equity component. Once the term ends, the money invested every month and the returns obtained on the same become the fund value.
Read more