Need Of Goal-Based Investing

Once India is said to be “Savings Economy”, but slowing the trend has been changing. Many individuals are coming forward to “Invest” especially from covid times. As the trend of work from home commence many have leisure time to think over investments. As the work from home conditions allow flexible working hours new investors are entering stock markets with great hopes.

Even though investors entering stock markets is a good sign to the economy, their aspirations are at sky-high. As the market rebounds from march 2020 lows and gives stellar returns, new investors have no leaps and bounds. What they have to remind is due to heavy retail participation markets are at all time highs. This may surprised new investors and tend to invest more forgetting the fundamentals of the stock market.

Basically stock market is volatile where new investors would be ready to face temporary losses in the interim. As the stock market gives amazing returns from the past 1-2 years, investors are booking “Profits”.

But the nature of the investment should be “Goal-Based“. You shouldn’t book profits seeing the short term price movements. Before investing you should fix a goal and stick to it. You shouldn’t redeem your investments in a hurry. You should redeem only when your goal is fulfilled.

Getting in and out of the investments might be exciting, but you would loose power of compounding if you interrupts your investments frequently. You should not redeem your investments seeing “temporary gains” instead redeem only if your goal is fulfilled.

In this process of goal based investing you would do proper asset allocation by reviewing your goals periodically. In goal based investing asset rebalancing is critical. First identify your goal and select the ways to achieve them.

Once your goal is fixed in your mind, you should stayed invested until your goal amount is fulfilled. In this process you should review your investments from time to time and shouldn’t get swayed by the short term movements.

If you are getting tensed on the stock market fluctuations appoint a good finance advisor who would take care of your investments by reviewing periodically and alert you in case of a bad investments.

If you manage your investments on your own it’s o.k. But it is better to have a good financial advisor who would guide you in turbulent times.

Sit with your advisor and inform him your goal objective and the time period you want to achieve that goal. If he is perfectly fit, he will guide you suitable investment products according to your goal. Be remember your goal objective must meet with his advice. Then only he can suggest you a better product.

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