Why is Goal Planning Important?

To reach a destination, you first need to understand your current position and the direction you need to go. Similarly, you must assess your current financial status, undertake financial planning, and set future goals. Goals outline your future requirements. Goal planning helps you achieve financial security by directing your present investments in a manner that generates returns over time to meet your goals.

How Do I Determine My Financial Goals?

To determine your financial goals, prioritize the life events that will require funding. This can be done by evaluating the importance of each event and then categorizing them by the time frame in which they will occur. For instance, planning for retirement and a child’s education should take precedence over vacations or purchasing a new car. Further, if your child is 2 years old and you are 50, prioritize retirement planning first, followed by planning for your child’s education.

What is the Process of Financial Planning?

Financial planning involves managing your finances effectively. Start by assessing your current financial status, including your assets and liabilities. Then, establish both long-term and short-term financial goals. You can utilize our SIP calculators to aid this process. Once your goals are defined, identify and evaluate suitable investment instruments based on your risk profile. Implement your plan by making investments. Periodically review the results and adjust as needed. Use our mutual fund calculator to estimate your earnings from SIP investments.

How Should I Diversify My Portfolio?

Regardless of the investment timeframe, your portfolio should be balanced to limit exposure to any single type of asset, which helps reduce overall volatility.

To create a diversified portfolio, invest in assets—such as stocks, bonds, cash, or others—that have returns inversely correlated with each other. This way, if some assets decline, others may rise, balancing the overall portfolio.

Consider including these instruments in your portfolio:

• Equity Shares
• Gold
• Liquid Funds
• Mutual Funds