MUMBAI : On a weekday night after dinner you sit in front of your television to catch some entertainment on the screen. Considering you have to option to watch Netflix, Amazon Prime or Hotstar, you end up scrolling for the next one and a half-hour instead of watching a show.

Though you have the tools to entertain, you end up confused with the multiple options and the indecisiveness in making a choice. However, say you go with a plan to watch one particular show. You will end up saving the time spent scrolling and instead watch something you like.

Similarly, when it comes to investment you need to have a goalbased approach. If you have multiple investment avenues, however, you don’t know what you are going to do with it, you will just end up as if lost in a maze. Here is why you need to do goal-based investment and how to work on it:

THE PROCESS

To begin with, you need to start on a budget. Sticking to a budget may not be enough. Make sure that you don’t go overboard on your expenses. Sometimes you have the money, but may not able to keep track of your expenses.

Making sure that you sticking to a budget is the first step in building your savings. Once you know your income, expense and savings break up, you need to turn it into a habit. You need to get into the discipline to save regularly without overshooting your budget.

The next step should be to grow your assets and accumulate it so that you have enough for your needs such as retirement. If you save regularly but don’t have a purpose for it, your money management is not complete.

GOAL-BASED INVESTMENT

To do goal-based investment, first you need to chart out your financial goals. They can include higher education, marriage, children’s education, vacation, buying a house, purchasing gadgets and retirement. Once you list down your goals, you need to divide them into long-term and short-term goals.

Long-term goals can include retirement, children's education and buying a property, depending on your age. Vacation, wedding and buying a gadget fall under short term goals.

Once you know your goals and the timeline to achieve it, you can start building your corpus for each goal by investing in instruments that can help you achieve them. For instance, if you want to achieve a long-term goal, which is say 10-30 years away, you can consider investing in equity instruments such as mutual funds. In case your goal is one or two years away, you can look at fixed income instruments such as debt funds and fixed deposits.

Planning your financial goal should be the first step before investing. Only if you know your destination, will you be able to take the best route on the right road.

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