Many of us are not aware of the term financial goals what does it mean & why it is important to understand this term for better planning of the future. This article will let you know about:-
* What are Financial Goals
* Why it is important to have Financial Goals
* Certain examples of Goals
* Investments and time management to achieve Financial Goals
What are Financial Goals
Financial Goals – compromise of two word Finance means “MONEY” & Goals means “OBJECT” . So this completes the meaning in raw terms i.e. TO EARN OR SAVE MONEY TO ACHIEVE THE DESIRED OBJECT. How one should invest his money so that he might have required amount when the goal is near.
Financial goals can be divided into Short, Medium & Long term Goals. As it will become more convenient for the investor to allocate his investments accordingly. Having set financial goals is the key to the security & independence. Every investor should have these goals for better future planning of investment and saving as well.
Importance of Financial Goals
The individual can evaluate himself by means of Risk Profiling so that he does know what kind of investor he is whether a conservative or aggressive investor, who shall invest after considering the risk associated with the investment product. Life is full of uncertainties to have an insurance cover for self gives an individual a state of peace of mind & so insurance covers up in event of mishappening. Whenever there is a change in situation or goal changes there is a need of revision that is to be done on periodic basis depending upon present scenario.
It is important to have financial goals as they encourage the investor to be alert considering their money requirements. There is a need to be financially literate i.e. one must be aware of his income sources & expenses, a proper budget is required to be followed so that a check on expenses is kept.
Certain examples of Financial Goals
Long Term
- Comfortable living after retirement
- Starting business after fifties
- Children’s Marriage
- Financial Stability
Medium Term
- Buying a house
- Renovation of house
- Children’s education
- Paying off debts
Short Term
- Creation of emergency funds
- Health cover
- Buying a car
- Vacations
Investment and time management to achieve Financial Goals
* Target years to achieve goals
* Corpus required for the goal
* Expected returns
We have classified the above listed goals in duration – long ,medium & short term – now this can be further classified in number of years goal is yet to come. Now for each defined goals certain criteria has to be list out which is By defining the above 3 criteria one can get a rough idea about what amount to save & invest in,
* Different products with different maturity period
* Rate of return on each product in line with corpus requirement
* Taxability of returns on such product
* Inflation effect should also be considered.
When a person properly defined his requirements he will have a clear vision which has to be achieved in the upcoming future, gives a sense of alertness & so encourages himself save more & invest more so as to earn a better return from the market and build up a better portfolio for self.
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