How to set your financial goals

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How to set your financial goals

How to set your financial goals

What do you want from your investments- When I ask this question, most of the clients’ answers are not only vague but also leading them towards complications. They may answer- I want the best return and for that I can take some risk. But at least my principal should remain intact. Some may quote a certain number as their goal e. g they may say I want 12% return.

Unfortunately with these targets, their journey of investments would neither be enjoyable nor getting you anywhere. There will always be apprehension and uncertainty with your investments. – Market is good now and it may go down, should I encash my investments?

– The Market is very bad and likely to go down even further. I should have taken out my money a lot earlier. My advisor is useless.

According to one study of the Indian mutual fund industry, only 11% SIPs continue beyond 5 years! If one thinks that by doing SIPs for less than 5 years, he/she would build wealth, then he/she should rather work on resetting his/her false notion about wealth building. For building wealth, you need solid 15-20 years and above. For becoming Crorepati, you either need to start with a sizable corpus or need to continue your SIPs for the next 15-20 years and above. In the later case, you will build the corpus even if your SIP amount is not that big.

But continuing your investments for such a long time is not easy at all. You need certain stimulating goals.

-The goals which are close to your values.

– The goals which keep your adrenaline rushing.

– The goals which are bigger than your ego.

Otherwise, very soon the fatigue may creep in and you will soon find the excuse to pull out your money and stop the game of compounding abruptly.

Let’s see what this means-

Values- You feel strongly towards your goals if certain higher values are attached to them. For example, if financial freedom is very close to your heart, then you will continue to invest till you achieve your financial freedom.

Enthusiasm- Your zest for certain goals will keep you motivated. For example if you love taking your family on a world tour, you will enjoy your investments as much or even better than the actual world tour.

Egoless goals- Being multimillionaire may be good for ego but this will not be effective in the field of investments because your impatience may not accept that long wait. But if your goal is to help your kids fulfil their dream education and career or/and give your family a life of financial freedom or/and giving something back to the society, then these goals will take you to such great heights which might have been even beyond your own dream.

Manoj Pandey