Written Goal Based Investments

Journey of Investment
Source: Clipart

As we know that the Journey from Income to Invest is not a straight way journey.

Journey from Earning to Investment
Source: Clipart

We have to first plan for Safe Income sources, Term Plan, Health Plan, Emergency Fund and than go for Investment.

For eg: If we want to send a rocket straight to the moon from the earth isn't it enough for a rocket to reach moon from earth if we launch the rocket in the direction of moon only.

Launching of Rocket to Moon
Source: Clipart

Or we require to do the mathematical calculations of  timing, direction, fuel, speed etc required for launching and reaching the rocket on to the moon.

You all will be agree with me that we need to do proper calculations for launching rocket and reaching to the moon.

This is just a example of calculation based target achievement to reach from one destination to other destination. This is Target based achievement..

Now in term of Finance how can we correlate this Target based achievement, we will see.

And in Finance we call it as Goal Based Investments.

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What is Goal Based Investment? 

Goal Based Invesments
Source: Clipart

As to reach moon from the earth we need proper calculations. So same thing is applicable to a large extent to our life also. To reach out successfully to our Investment results, we need to have proper goals aligned with our investments. This is known as the Goal Based Investment.

And this Goal generally comes into picture in our life after, we are having our settled Family (Wife & children) and we want to give them secure life and want to live with them securely. Then we have to go for long term planning on Investment with proper goals.

To have a more clear idea of Goal Based Investment, first we need to understand what are our Goals related to investment or goals which required proper channelized investments.

What are our Financial Goals?

We have Financial Goals like:
  • Child Education (Primary and Higher)
  • Child Marriage
  • Retirement etc.

What are our Financial Goals requirement and Road blocks?

Now we have captured our Financial Goals but the confusion is how to align this Financial Goals with our Investment in that direction.

I mean to say 
  • Child Education  requires 2 Lakhs for primary and 10 Lakhs for Higher education
  • Child Marriage requires 10 Lakhs
  • Retirement we require 70 Lakhs. 
Road Blocks in Saving and Investment
Source: Clipart

and our Income is limited and inflation is also eating out some portion of our income and savings.

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How to align Financial Goals with Investments?

Till now we have got clear idea that we have limit income and big targets or goals to achieve.

So first we have to do the time bound drill down of our Financial Goals.

For eg : Consider a family of 3 persons Husband, Wife and a Daughter.

Small Happy Family
Source: Clipart

Husband is the only income generating person and Daughter is around  4 yrs old now.

Husband having around 70K salary in hand per month. 

Time Vs Target Chart
Time Vs Target Chart

So from above table, we try to show the relation between goal and time required for different goals.

This table is further reduced and given below with Goal details, Finance required and Time available:

Targeted Goal Vs Time
Targeted Goal Vs Time

Till here from above table we have got details of Financial target and Time available, now we have to work out for how much money we have to invest in each goal and at what growth rate to achieve our goals in time bound manner.

Let's go and workout for that,

How much per month investment required to achieved our targeted goals?

As in above table we have targeted 5 Goals of different time horizon and for different financial amount requirement.

We know that there are several asset classes for investment with different prospects of return like investment in Gold, investment in Land,  investment in Fix deposits and investment in Equities.

For this example we will consider investment in Equities.

As you know that in long term till now Equities have given return @ 12.3% CAGR, if invested in Index.

So below tables give you clear idea that if we invest in each goals with calculated amount per month expecting @12% CAGR, then we will achieve our required financial target with respective dead lines.

Targeted Goal @12% Vs Time
Targeted Goal @12% Vs Time

So for
Goal 1 we require to investment Rs 370 / month
Goal 2 we require to investment Rs 540 / month
Goal 3 we require to investment Rs 2315 / month
Goal 4 we require to investment Rs 890 / month
Goal 5 we require to investment Rs 2563 / month

Total Rs 6678 / monthly only to achieve our Financial Goal, if invested in Equities.

But this is not the real picture of our investment and returns, as there is one hunter which is hunting and eating out huge proportion, out of our saving.

Frustrated Man
Source: Clipart 

What is Inflation?

As we know that something which we have purchased last year of Rs 100, now this year it is costing Rs 108. This means that last to this year, things are getting costlier and cost @ 8% higher. The things which is of Rs.108 this year, it will cost of Rs. 116.64 next year. This phenomenon is known as Inflation. It impacts very badly on our investment return.

What is the Real Picture of Our Investment and Return with Inflation?

As we are now aware of important term inflation, which is also following out investment goals and eating out huge portion of our investment and saving.

Below table give us clear difference of our previous Goal based investment @ 12%  and now Goal based investment @12% with inflation @8%.

Targeted Goal @12% with 8% inflation Vs Time
Targeted Goal @12% with 8% inflation Vs Time 

Here Column C & D give difference of Finance required today for respected Goals and the Finance required in future with inflation @8% with respected Goals. Please see the increased difference in amount requirement with @8% inflation in each Goals.

Similar way Column F & G give the clear difference between Monthly investment required from today without considering inflation @8% and Monthly investment required from today with considering inflation @8%.

See the huge difference in total investment required amount.

Without considering inflation rate required investment is Rs 6678 / month and with considering inflation @ 8%  required investment is Rs 35584 / month.

Just For Example only to balance investment :

  • Salary - Rs. 70,000
  • Monthly Exp - Rs. 25,000 to Rs. 30,000
  • Investment - Rs. 35,000
  • Still Balance - Rs. 5,000

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I know friend this is a tough topic to discuss and understand. But our whole investment result future depends upon how we plan our goal and how we get align it with our investments, is most important. Because after reaching to our 40 plus age, we can't come back and get rectified everything for our better future. So prior to the launching of rocket every calculation to be done and to be perfect. Similarly our goals of investment to be calculated and to be perfect. Also so early you start so more time you will get to grow your investments.

That's all Friends. Good Bye and All the Best !

Disclaimer: This article is only for knowledge and information sharing and not for any type of recommendation of investment and the calculations are only for example for explanation. Do your own independent research before investment.

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Post a Comment


  1. A nice session on how and where to do the investment.

  2. Sir, retirement goal 70 Lac is enough?

    1. Here 70 Lakh is only for understanding the concept with 70k salary, how far u can go. In addition u will also have PF, Shares and property if any also. Retirement Goal should be nearly 2 Cr for now. And with inflation of 8% in future after 27 to 28 yrs, the amount required is 17.25 Cr. Work on this fast and now.

    2. Thank you sir
      & 👍 for 17.25 cr.

  3. Very good demonstration of Financial Goal Planning. Each one of use to work on this significant aspect of life

  4. Thanks. Definitely you all should work on it, Otherwise it will be too late to cover it

  5. Article bahut acha hai sir
    Realistic h kafi Sir ise pta rchlata h ki investment kitna important h lif mai goal achieve karne ke liy.... Ir use bhi important h goal set karna.... Thank u sir knowledgeable information share karne ke liy....

  6. Thanks sir for explaining the Goal importance in life .


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