Set SMART Financial Goals: Invest in Mutual Funds at MySIPonline
It has been rightly said that an investor without any goal is like a traveler without any destination. As it is vital to have a proper roadmap to reach the target that you want, in investing also, you need to have a smart plan to attain your financial goals effectively.
But, it is seen that most of the people do not even have financial goals. What could be the possible reason behind this? May be it’s because it is not easy to set smart financial goals. However, the thing which stands essential is, having them. Yes, one must have smart financial goals so as to walk through a pre-decided way to reach the destination.
Replies of people when we asked them about their Financial Goals:
I want to become rich!
I want to create wealth.
I want to be successful.
I want to achieve all the success in life.
I want one crore rupees.
.....and so on.
All these goals are simply the wishes. They do not have any roadmap to walk through. If one says, “I want to become rich”, it doesn’t make any sense as it doesn’t describe logical and practical aspect of the goal. Rich with what- money or assets? If assets, then what type of assets and in what time? And if cash, then how much of that?
Similarly, all the other answers from the people are unclear. No doubts that they have wishes to be fulfilled, but those cannot be included in the category of smart financial goals. It is not easy to set financial goals. One needs to consider all the wishes and wants to set proper financial objectives which they want to achieve by a certain time.
What Are Financial Goals?
You should know that what you want to achieve in the next five or ten years and where do you see yourself financially in future. Your financial goals must be precise and clear. If you want to be rich, then you must have clear vision that how much rich you want to be and by what time? Do you want to be cash rich or asset rich? etc.
Setting SMART Financial Goals:
Setting SMART financial goals is not a very typical job, it is a simple technique following which you can make your undefined goal, financial or otherwise, a well defined and smart one. Therefore, you must consider these points to go effectively in setting your SMART financial goals:
- Specific: If you want to be rich, then you should know that how rich you want to be and in what time. Suppose, you need twenty lakh rupees in the next five years, it will become more specific if you add the reason for such requirement be it for daughter’s marriage, or buying own house, etc. Furthermore, you should have a specific description of all your financial goals to be it a smart one.
Hang on! It isn’t over. Let’s see what more it you would need to make a SMART financial goal.
- Measurable: It is very important to measure. We do it all the time in our life. We compare things and measure the various aspects, be it quality, quantity, or any other features, to choose the best one for us. Similarly, when setting financial goals, one must not forget this point. The goals should be measurable. It means one should be able to assign weights to them as per importance or any other aspects. It is not as simple as it looks. Assigning weights to different financial goals is a very crucial part, and you must do it with keen attention so as to avoid making any mistake in the process.
Moreover, the goals should also be measurable in terms of numbers. For example, you wish to buy a car and a house in Mumbai which presently cost Rs. 10 lakh and 50 lakh, respectively. So, after five years, considering the inflation rate and other parameters, you may require an increased amount to fulfil your dream.
- Attainable: It is not enough to decorate your goals with numbers. You need to be on grounds while assigning them. Suppose, to attain a corpus of Rs. 1 crore in next 20 years, you need to start investing Rs. 10,000 in the best mutual funds through monthly SIP expecting return rate at 12.5%. If you are unable to invest Rs 10,000 monthly and you are setting the goal to be achieved as one crore in the next 20 years, You are living in an imaginary world. Your financial goal should be attainable & thoughtful and has to be seen in the light of practically as well. You must check the attainability of your goal while assigning them numbers.
- Realistic: You must know the reality and not merely set the goal. You cannot say like ‘I will build a corpus of one crore rupees for retirement by investing Rs. 1,000 monthly in the last five years through SIP.’ After analysing the correct picture of the investment and other aspects, you should set your financial goals, and make sure that they are realistic.
- Time Bound: Finally, the last point you should consider while setting smart financial goals is the time boundation. Each of your goals should have specified time limits assigned to it. Suppose, you have three financial objectives to be achieved- your daughter’s marriage, buying own house, and wealthy retirement. All these three goals must be assigned time limits such as you foresee your 15 years old daughter to be married after 10 years, you wish your own house in next five years, and you want to get retired after 30 years.
Henceforth, set your SMART financial goals today and achieve them effectively tomorrow. To check the best mutual fund schemes to invest in today in order to go a long way in creating a corpus for your tomorrow, see the top-performing schemes at our portal, i.e., MySIPonline.
- LTCG Tax Is Not As Negative As it Seems; Here’s Why?42724 min read Jan 01, 1970
- Sensex Plunges Over 1000 Points; Should You Buy or Hold Your Investments for Correction?43613 min read Jan 01, 1970
- Sensex Dives Nearly 840 Points: Things to Consider and Experts’ Take44613 min read Jan 01, 1970