3 Steps To Financial Success Using Goal-Based Investing

Goal-based investing makes it more likely for you to reach your financial goals. Here’s how –

Money is fungible, which is a fancy way of saying that once it is earned it can be spent on anything. This can cause problems like money in a checking account intended for a car down-payment or for a child’s wedding could easily be spent impulsively on a vacation or a flat screen TV.

So, how does one keep track of what we are saving or investing for?

Behavioral economists suggest using goal-based investing. Goal-based investing is the same as “asset-liability management” technique used by institutional investors. Simply put, goal-based investing ensures that you have enough money when you plan to spend it in the future.

Remember the three-jar saving technique mom used? One jar for emergencies, one for essentials and one for entertainment. Goal-based investing is a sophisticated version of the same and it makes our financial lives a whole lot better.

For starters, a financial goal has three important aspects –

  1. Purpose or why are you saving? For eg, a child’s education.
  2. Amount or how much would you need? If you intend to send your child abroad to study the amount could be in crores or for India based education could be in lakhs.
  3. Time or when will you need the money? If your child is 4 you have ~14 years to create your college corpus.

Once you have listed all your financial goals, a few things happen that help you in focusing and achieving your goals –

  1. Visualize

Honestly, money in a way is boring! It’s the experiences (vacation, weddings) and things (house, car) it buys that’s exciting!

Goal-based investing helps in visualizing what money will buy.

Imagine sitting in the living room of a new apartment, or the new car smell. Visualization is powerful as it is known to make one happy even prior to purchase. Visualization and the happiness it brings today increases the odds of success in achieving one’s goals. Learn more about goal visualization here.

  1. Prioritize

Writing down all your financial needs and wants helps you prioritize. Does that 2020 World cup trip sound more exciting or the idea of owning a bigger car? Maybe both are attainable. Create a goal for each and evaluate the investment needed for both. If the funds are insufficient, then prioritize.

This exercise protects from heartbreak later. It also helps you differentiate between needs (retirement, education, marriage etc) and wants early on.


  1. Commit

Yeah.. A Salman Khan level of commitment!

The first step is to automate the investment process as much as possible. Consider investing every month, by starting a SIP. It will provide discipline and help you put your goal planning on auto-pilot.

Second, track your progress. Are you investing enough? Are you on track to reach your goals? Tracking the progress of goals increases the commitment to achieve it. Every time you track progress, you recommit yourself to achieve the goal. The closer one gets to the goal, higher the resolve to cross the line.

Set and track! Don’t set and forget (like that gym membership…)!

Try our goal based investing tool and reach your financial goals.

Did we mention goal based investing increases the likelihood of achieving financial goals? Yeah, we did! But don’t take our word for it. Use our goal based investment tool to:

  • visualize
  • prioritize
  • track

and achieve all your financial goals.

Funny how the brain works, right? Writing and tracking financial goals actually fuels the commitment required to achieve them!

Quite like this 😀


This article was initially published by CNBCTV18 in the Personal Finance section.

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4 Responses


    September 3, 2018 AT 06:14

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      July 15, 2021 AT 15:23

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