Goal Based Investing

Invest based on your financial goals. Mahindra Manulife goal-based investing guide.

Goal-Based Investing in a Mutual Fund

How Goal-Based Investing Works?

You save for specific life events, not just save "for the future"; this is what goal-based investing is about. Certain investment goals, categorized as saving to buy a home, saving to fund a child's education, and saving for retirement, all take an investment approach related to the timeline in which the money will be required.

This is effective because it understands human behavior. You tend to be more disciplined when you set aside ₹3,000 each month towards your daughter's education as opposed to simply saving.

Why do Mutual funds work well in Goal-Based Investing?

Investment Strategy Based on Time Horizon

Sample Investment Calculations for Common Goals

Here's a practical calculation table showing monthly SIP requirements for different financial goals (assuming various expected returns - actual returns may vary):

Target Amount:

Time (Years):

Assumed Returns:

Monthly SIP (Rs.):

Total Investment (Rs.):

Important Notes: The calculations provided here are only illustrative and have assumed constant returns, which do not reflect actual market conditions. Actual returns in mutual funds are market-sensitive and will vary in their performance. Past performance is not indicative of future performance.

Key Principles

Goal-based investing means taking random savings and focusing them toward actual wealth building. When an investment is tied to a certain dream, it creates a motivation that ensnares one in discipline throughout the various cycles of markets.

The basis of the theory stems from pragmatism: define clear goals, appropriately select mutual funds, invest systematically, and remain patient. One succeeds not through the correct, timely purchase or sale from the market but through patience to allow the money a chance to grow, potentially some more toward the goals set before them.

Remember to always keep in mind to quite extensively pore through any scheme-related documents before putting in your money, and when in doubt, always take the counsel of a qualified financial advisor on a case-by-case basis.

FREQUENTLY ASKED QUESTIONS

Short-Term Goals (1-3 Years)

If you have short-term needs, like emergency money or a vacation, you

Medium-Term Goals (3-7 Years)

Goals such as wedding costs, vehicle purchases, or down payments on a home will require some intermediary investment products. Hybrid funds invest in both equity and debt, which offer some potential for growth with stability.

Long-Term Goals (7+ Years)

Another example of an investment goal would be for retirement planning or education for your children. This investment could be in equity mutual funds, because these investments over long periods of time have provided higher inflation-adjusted returns. However, equity mutual funds also contain a greater level of volatility.

Beginning your investments even five years earlier can significantly reduce your required monthly contributions.

Stay Disciplined

Continue SIPs even during market volatility. Timing the market is difficult even for professionals.

Account for Inflation

A house costing ₹50 lakh today might cost ₹1 crore in 15 years due to inflation.

Avoid using retirement savings for short-term needs. This can derail your long-term planning.

How Do I Pick the Right Mutual Fund for My Goal?