Setting goals has been an instinctive marker of human life. We are born with the impulse to grow and
achieve in life. We all tend to have thoughts about achieving financial liberty. But merely relying on the fixed income won’t always suffice in attaining those goals. It is why the need for investing has come forth. Investing gives an individual an opportunity for wealth creation and allows them to generate a passive income which can massively help them to attain financial independence. Out of many individuals seeking the coveted financial independence, only a few of them end up achieving it. The reason is clear, it just doesn’t happen overnight. You need a detailed plan and the willingness to devote to it.
We here look at these investment goals and decisions that will help propel you towards financial
independence. To help you gain a clear outlook about investing, we’ve marked this one in a series of
questions that will help you gain a clear outlook towards attaining financial independence. Read along.
1) What should your investment goal look like?
a) It should be measurable
With measurable, we mean clear, concise and definite. Your goals should be clearly defined and
measurable. Forsake, if you set aside a goal of saving Rs 10,000 a month then that you can hold
yourself accountable to it. This is a clear difference from merely saying that ‘I am setting a goal
of saving more money each year’ which resonates unclear and immeasurable. Always plan your
budget accordingly and manage your expenses so that you can have a clear idea of the amount
you have to set aside.
b) It should be reasonable and rational
Your goals should be reasonable and rational. You can’t just hope to invest Rs 45,000 if you’re
making around Rs 50,000 a month. Your investment should be aligned with your goals. The
rational part of setting up investment goals is to keep a certain part of it aside in liquid form for
any futuristic emergencies and investing the rest in investment plans. If you plan to reach
around Rs 10 lacs by the age of 35, you should invest the money wisely so that you can attain
the goal. You can use the time value of money to test the amount of savings that you need to
keep aside every month.
c) It should be realistic
We have been programmed with the essence that money is the only thing that matters. Money is a
tool that exists so as to serve us and allows us to enjoy life with more utility and happiness.
Investment goals should be realistic where you can partake in the lifestyle and enjoy the
moments around you. There’s literally no point in accumulating the money for the
unpredictable future if you forget to live your present life. Ensure that your goals are realistic
enough so that you can make a good life at the very moment.
d) It should be in line with your objectives
There are three varying objectives and goals that tend to come with investing. Its short-term,
mid-term and long-term goals. For say, if you have an event like marriage coming up or say you
need to repay your student loan, then short term goals should be your essence. Midterm goals
are something that is set aside for goals like setting up funds for kid's education or buying a
dream bungalow. In the long term part, these goals are generally about seeking a stable income
source later in retirement life or creating a financial legacy. Your investment goals should be
based on the needs and desires that can be articulated over a period of time as short term, mid-
term and long term.
2) What is your number?
Attaining financial independence requires statistical backing. How much monthly passive income would it require you to live off without having to trade your time for employment. The amount required for living on the passive income generated from the capital is the number you’ve been looking at. As a thumb rule, this normally comes around at 3% – 4% of the principal value of the capital invested. That’s your number there.
3) What is your risk tolerance level?
A major thing about risk tolerance is that not everybody is wired for it. No matter how much money we amass, any fluctuations in the share market will lead up to emotional misery on our part. There are
plenty of us who adhere to the fear of losing out the money end up investing in the safer options. The
first thing to seek before investing is the level of risk tolerance on your part. If you have a high-risk
tolerance level, then you can invest in high risk yet equally rewarding options like mutual funds, equity, and more in the market.
The equity market is a highly rewarding platform and has seen plenty of gains over the period. You can start your investment plans with a venture into the equity market and if you feel like taking cues from the expert then you can seek stock market tips to help you manage better in the stock market. Or if you are more inclined to a safer and smoother ride, then there’s plenty of investment options like fixed deposits, real estate, and more where you can build upon a slow note with less of a risk associated with it.
4) What’s motivating you to achieve financial independence?
There’s always a primary or a secondary reason behind aiming for financial independence. You ought to look inside yourself and seek answers as to why you’re looking for investment goals. For some of us we just tend to accumulate the amount without any real need. While some of us have goals in the form of short-term, mid-term or long-term ones and want to invest so as to attain those goals. If your motivation is in line with your goals, then investing would be an entertaining thing for you where you can learn, enjoy and experience.
5) Can you manage your portfolio on your own?
This may seem a bit out of stretch but it’s something we should really talk about. Managing a portfolio can be an easy task yet at the same time can be a daunting aspect too. You can align your investment goals based on market research and invest in the stock market. Or you can even tie up with asset management companies for managing your portfolio.
Setting up investment goals is the first route to gaining financial freedom and independence. Investing
isn’t a hard task as people put it. It’s something you can completely go for without much of a fuss. All you need is to be clear about your investment goals and stand your ground. Get it right, make calculated decisions and you can stand an easy route towards attaining financial independence.