Let us see how you can invest for your different financial goals.

Prioritise your financial goals

First, list your financial goals into short-term, medium-term, and long-term goals. You can estimate the amount you have to accumulate to reach these goals and the required timeline for each of the goals.

After identifying these goals, the next step would be to classify them into regular and exciting goals. Regular goals might include saving for retirement, paying off loans, and building an emergency fund. These goals are important but might not motivate you to start investing towards these goals. On the other hand, exciting goals include those you are likely to invest money in as soon as possible. These are likely to be short-term goals such as travelling the world or purchasing a luxury car.

Combining regular and exciting goals

One of the ways that you can stay motivated is by tagging regular goals like retirement with exciting financial goals such as a yearly vacation.

For instance, if you are considering saving a minimum of ₹5,000 per month for a yearly vacation and ₹25,000 per month for retirement, you can start a Systematic Investment Plan (SIP) for your vacation before you begin investing for retirement. You can even allow a few SIP instalments to pass to become familiarised with the whole process of saving and investing.

Once you see that your vacation fund is nearing your target amount, you will most likely feel encouraged to invest for other long-term goals like retirement. After six months of starting the vacation SIP, initiate the SIP for your retirement fund. When you successfully achieve your vacation goal, you will experience the positive impact of planning and achieving your financial goals. This achievement can serve as motivation to continue investing in your retirement fund.

By linking your vacation and retirement goals, you might find that investing for retirement doesn’t feel like a chore but something enjoyable. You can also increase the SIP amount for your vacation by a certain percentage each year, say 5% or 10%. Simultaneously, raise your SIP for retirement by the same rate, ensuring that both goals progress in tandem.

You might also do it the other way around. You can also look at investing for both goals simultaneously. However, you have to discipline yourself to reduce/pause the SIP for your exciting goal if you pause your SIP for your retirement.

Set up automated savings/investments

There are two main ways to save/invest for your financial goals. The first method is making lump sum payments, and the second is setting up an automated savings or investment plan.

Setting up an automated plan will help you contribute effortlessly to regular and exciting goals. You will stay consistent as the amount will be directly debited from your savings account and moved to your investment account. It will also reduce the temptation to divert funds from your financial goals.

For exciting goals that you need to fulfil within a year or so, you might want to save the money in a Recurring Deposit (RD). For regular goals where you must invest more than seven years, you can invest in diversified equity mutual funds through SIP.

Track progress regularly

After you set up your RD or SIP, it is essential to track your progress periodically. Checking in on your goals every few months allows you to assess whether you are on target to achieve your goals. If not, it gives you time to make the necessary adjustments.

Many online investment platforms let you evaluate your investment’s performance and suggest the steps you need to take to reach your financial goals on time.

Celebrate milestones

Just like we treat ourselves when we hit milestones in our personal or career lives, we can also incorporate it into our financial goals. We know that celebrating milestones helps us stay motivated and make the whole journey a pleasant experience.

So, when you reach specific savings goals, such as completing three years of retirement planning without fail, you can consider treating yourself or your family members to a short weekend trip or a special reward. This will keep you inspired to continue investing for your long-term goals.

Lumpsum investments

In addition to SIPs, additional lumpsum investments can help you reach your financial goals faster. For instance, if you have received a bonus from your employer, you can split 50-50 and invest an equal amount towards both goals.

In conclusion, incorporating exciting and regular financial goals into your planning strategy can transform how you approach your long-term investments.

The objective is to start with the goals you are excited about. Once you are familiar with savings and investments, you can start with your long-term goals that might be essential but not necessarily exciting.

This approach ensures a more balanced financial future and makes the journey enjoyable and fulfilling. You can consult a financial advisor to make your dreams a reality.

Padmaja Choudhury is a freelance financial content writer. With around six years of total experience, mutual funds and personal finance are her focus areas.

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Published: 10 Dec 2023, 10:09 AM IST