Why is Goal Planning Important?

If you want to reach a destination, you first need to know your starting point and the direction to your destination. Similarly, you need to analyze your current financial status, do financial planning, and set future goals. Goals define your future needs. Goal planning helps you become financially secure by channeling your current financial investments in a way that generates returns over time, fulfilling your targeted goals.

How Do I Determine My Financial Goals?

To determine financial goals, prioritize the events in your life that will require funds. This can be done by assessing the importance of each event and then categorizing them by the time period in which they will occur. For example, retirement and child’s education planning should be given more weight than vacations and buying a new car. Further classification can be based on urgency: if your child is 2 years old and you are 50, prioritize retirement planning first, followed by child’s education planning.

What is the Process of Financial Planning?

Properly managing your finances is known as financial planning. Start by determining your current financial status—how much money you have, your assets, and liabilities. Then, set up your long-term and short-term financial goals. You can use our SIP calculators to assist with this process. Once your goals are set, identify and evaluate the financial instruments you want to invest in, ensuring they match your risk profile. Implement your plan by starting your investments. Periodically check the results and make adjustments as necessary. Use our mutual fund calculator to know how much you will earn on SIP investments.

How Should I Diversify My Portfolio?

Regardless of the timeframe, your investment portfolio should be balanced to limit your exposure to any single type of asset. This reduces the volatility of your portfolio over time.

To create a diversified portfolio, invest in assets—such as stocks, bonds, cash, or others—whose returns are inversely correlated. This means that even if some holdings in your portfolio are declining, the others are likely to be growing, thereby offsetting potential losses.

You can include these instruments in your portfolio:

• Equity Shares
• Gold
• Liquid Funds
• Mutual Funds