7 key steps to master goal-based investing

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In the journey of life, we all want to achieve important milestones, whether it's buying a home, funding our children's education, or retiring comfortably. However, achieving these goals requires more than just wishful thinking. It demands careful planning, disciplined saving, and strategic investing. This is where goal-based investing comes into play.

Goal-based investing is a strategic approach that helps individuals accurately assess their financial liabilities for various life milestones and accordingly save and invest for them. By aligning investments with specific goals, individuals can create a roadmap for their financial future, ensuring they have the necessary funds when they need them the most.

Goal-based investing starts with identifying and quantifying your financial goals. These goals can be short-term, such as buying a car or going on a vacation, medium-term, such as purchasing a home or funding your children's education, or long-term, such as retiring comfortably.

Once you have identified your goals, the next step is to quantify them. Determine the exact amount of money you will need to achieve each goal. Consider factors such as inflation and the time horizon for each goal, as these will impact the amount you need to save.

Vivek Jain, Head-Investments, Policybazaar says, “Whether it's buying your dream home, securing your child's education, or planning for a comfortable retirement, goal-based investing encourages you to allocate and invest your funds according to your needs." 

“For instance, if you want to start retirement planning at 35 and can set aside ₹20,000 every month over the next 25 years, at an estimated 12% rate of return in market-linked products, you could accumulate up to ₹3.8 crore as