The Buyt Desk
Goals play a significant role in every sphere of life. Without it, life has no relevance. It is true in the case of investment as well. If you are investing your money without a goal, it will not help you address specific goals like child education, health issues, retirement, etc.
Therefore, goal planning in investment is crucial. Once you have planned your goal, you can select the fund you want to invest in. This meticulous investment planning will help you plan your life well.
Experts say a person must have three types of investment goals in life and choose an investment plan accordingly. Let’s dive deeper to understand these.
Three Categories Of Investment Goals
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Short-term Goal
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Mid-term Goal
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Long-term Goal
Short-term Goal – These are the goals you want to accomplish within three years or less time. Examples of short term goals are, going for a holiday, buying a car, etc.
For these goals, you can settle for mutual fund schemes that are low-risk oriented and could fetch moderate returns. The debt fund or debt-oriented hybrid funds are a good option for this scenario.
Debt funds offer an array of low-risk schemes that address various financial requirements.
Mid-term Goal – The mid-term goals are those you try to achieve in the next three to eight years. This type of goal includes:
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Getting married or planning a sibling marriage in 4-5 years.
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Clearing off the home, car or other loans.
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Buying a bigger car.
The mid-term goal gives you a little longer time horizon, which means you can take a slightly higher risk. When it comes to picking a moderately high-risk scheme, you can consider an equity-oriented hybrid scheme. The advantage of investing in this scheme is that the equity gives capital appreciation, and the debt component in it protects the capital. You can also consider dynamic asset allocation funds managed by fund managers. In this fund, the fund managers customize the asset allocation between debt and equity, analyzing the market conditions to reduce risk and increase returns.
Long-Term Goal –A goal that you wish to achieve after eight years is called the long-term goal. The long-term goals include retirement planning, child marriage, buying a home, etc.
The long-term goal gives you enough time horizon. You can invest your capital in funds that grow considerably. High-risk investment options such as equity mutual funds are good for this. It has shown the growth potential of the fund over a long period. The other options to consider are small-cap, Flexi cap and mid-cap mutual fund schemes. They have proved to offer inflation-beating returns. Therefore, it is the best option to invest for higher returns. This investment option can also help you meet your financial goals.
While planning an investment goal, you must also create a goal for the emergency fund, which you can withdraw at short notice. A liquid fund is a good option for this. You can invest your idle cash in this fund and give it the potential to earn returns for you.
