How Goal-Based Investing can help you to reach your Life Goals

How Goal-Based Investing can help you to reach your Life Goals

How Goal-Based Investing can help you to reach your Life Goals

Life goals quote

We all have dreams and aspirations, and we need financial foundations to support our aspirations. The responsibility of creating these financial foundations also lies with us.

Let me begin with my own example. I started working at the age of twenty-one after completing my Engineering, and after a year I got married. Those days Engineering + MBA was a coveted qualification. I wanted to do an MBA after marriage but the costs were prohibitive, and beyond my affordability. I had to wait for more than a decade to accumulate sufficient corpus before I could sponsor my MBA abroad.

Now, when I look back, I realize how proper financial planning could have helped me to achieve my Life goals on time. That is the advice I would give my daughter as well, who will be entering the workforce in six months’ time.

What are your Life Goals?

At any stage of your life, you will have dreams and aspirations. While some dreams may be abstract and reside as mere wishes in your mind, some dreams stir you enough to make you work towards accomplishing them. You clearly aspire for those and feel motivated to plan for achieving those. These dreams can then turn into your Life goals.

“A dream becomes a goal when action is taken toward its achievement.” ~ Bo Bennett

A life goal could be to have a destination wedding, or a dream house, or to save for a start-up, to sponsor your own education or your children’s higher education, wealth creation, to plan for retirement or to create an emergency fund.

Life Goals


How to plan for achieving your Life goals?

Goal Setting Quote

“Setting goals is the first step in turning invisible into the visible.”     ~ Tony Robbins

Once you have identified what your Lifegoals are, you need to assess the amount of time you have in hand to reach the goals. These Life goals can be short-term, mid-term or long-term, depending on the time frame, within which you plan to achieve the goals.

The next thing to do is to find out the cost of achieving the goal today. Say, if you wish to go on a polar expedition and Antarctic cruise, you need to know what it would cost you to travel to Antarctica today. If you plan to do it in the next 2 years, you add a reasonable amount of inflation to the cost and work out how much the Antarctic cruise would cost in two-years’ time.

After you know the cost of meeting the goal in the given time, you have to assess out how much you need to set aside from your earnings to save for the goal. Though it sounds simple, yet it takes some amount of thinking to work out a realistically feasible figure.

With the help of a good financial advisor, you can select a suitable scheme that allows you to accumulate as well as grow your savings to meet your life goals while matching your risk profile. 


What is Goal-Based Investing?

Investing in a planned manner to achieve your #LIFEGOALS is called Goal-Based Investing. Each individual or broadly speaking, each segment of the population may have different sets of #LifeGoals to accomplish, for which they need to invest in a systematic manner.

India has a youthful population, whose dreams and aspirations are changing with the changing times. The young in urban India, have high expectations from life and are setting high targets to achieve that perfect life. Smart front –foot financial decisions, augur well with this segment of Indian population

At the same time, the average lifespan of people is also increasing. So, they need resources to maintain their standard of living and quality lifestyle for a longer period of time.

Planned investments made with the objective to meet #LifeGoals can give the most effective results.


Bajaj Allianz Meetup on Goal-Based Investing

At a meetup organized by Bajaj Allianz Life Insurance on the 8th of Jan 2018 in Mumbai, I got a chance to know more about the concept of Goal-Based Investing.

The session started with a talk by actor and comedian Suresh Menon. It was a hilarious to hear him talk about his Life and Life Goals. In his typical Bollywood comic style, he shared that for quite some time, his only goal in Life was to get work.

Goal Based Investing

But even after he started earning, he remained clueless about saving and investing. When someone suggested that he gets a Life Insurance Cover, he was not enthused with the idea that he would have to die while his policy is still in force to get any returns. Then, someone told him about ULIP.

I am happy to have discovered the ULIP scheme, which will give me insurance cover in case of death and investment returns if I continue to live,” he quipped.

“Since then, my mantra is #InvestBefikar and #Jiyobfikar.”

Point taken. ULIP plays a dual role in Investment and Insurance. 

The other highlight of the session was a Dart Game to demonstrate the importance of Goal-based investing.

Goal Based Investing

On a pinwheel, Life Goals were drawn, from which the participants were asked to choose a goal. A person would rotate the wheel, and each participant had to hit the goal with a dart. As the wheel was spinning, many of the participants missed hitting the goals. Some started making multiple attempts at throwing the dart and hit the goals.

The simple game had a big lesson for all. Time keeps moving. The chance of hitting your goals are higher when you throw the dart right on time and at the right angle.

Likewise, you increase the probability of reaching your Life Goals when you start investing on time and in the right scheme.

The last part of the session was the most informative one, in which Bajaj Allianz Life Insurance MD and CEO Mr Tarun Chugh along with the Chief Investment Officer (CIO) Mr Sampath Reddy explained how Goal-Based Investing can be used to meet Life Goals and busted some of the myths around ULIPs, which I shall elaborate in the following section.


How Goal-Based Investing can be used meet your Lifegoals

Goal-Based Investing requires the investment approach to suit the individual’s Life Goals. It takes into account the priority of goals, time horizons and risks.

Different investment approaches may be needed to fulfil different life goals. While one may take an aggressive approach to a certain goal, one may choose to be very conservative in the investment approach for a different goal.

Short term goals are addressed differently than mid-term goals or long-term goals. Safety is a prime consideration for a goal that needs to be met in a short time frame (say making a down payment for buying a car in a years’ time). Debt as an asset would fit the goal better for such short-term goals.

ULIPs are great investment options for Long-term Life Goals (over 10 – 20 years). These goals can be planning for your children’s higher education or marriage, down payment for buying a property or planning for your retirement.


Myths and facts surrounding ULIPs

Before we delve into this, you may like to see here How does a ULIP Plan work 

A ULIP is a flexible and transparent investment instrument which offer the dual benefits of investment and protection. One part of the premium paid for a ULIP goes towards coverage of risk to life and the other gets invested in generating returns.

Monthly investments in ULIP can be made through the SIP mode. Any additional lump sum investible income can also be added as top-ups to the ULIP policy.

ULIPs have different fund options with varying asset allocations between equity and debt. Fund asset allocation can be tailored to your life goals. Mr Reddy explained that a major advantage of ULIP is that irrespective of the holding period, switching between fund options is exempt from tax.

Overall, ULIPs provide life cover, give tax benefits at a low cost. Due to the long-term investment outlook, ULIPS protect from short-term volatility and offer good returns over a longer time horizon. ULIPs provide good means for long-term wealth creation and achieving your long-term #LifeGoals.

Finally, I would like to reiterate that Goal-based investing is a smarter way to meet your Life Goals over chasing returns. Though the best time to start financial planning is early in your career. it is never too late to consider investing in a good scheme.

Watch this space for more information about a Soon To Be Launched product by Bajaj Allianz Life that will help you to achieve your #LifeGoals.


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    By: Somali K Chakrabarti

    Hi there! Welcome to Scribble and Scrawl! Here, I delve into themes related to positive lifestyle – from making smart-living choices, savvy financial decisions to nurturing the mind, body and soul. I share my travel experiences, explore facets of art and culture and highlight inspiring stories. Hope you enjoy reading my posts.

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Somali K Chakrabarti

Hi there! Welcome to Scribble and Scrawl! Here, I delve into themes related to positive lifestyle - from making smart-living choices, savvy financial decisions to nurturing the mind, body and soul. I share my travel experiences, explore facets of art and culture and highlight inspiring stories. Hope you enjoy reading my posts.

  • Nice post. It is important to plan investment. When I was growing up, most of us did not have much plan. Partly because socioeconomic status was low. Not many people could think of a lot of investment. LIC used to be a prime instrument. It gave life cover and some saving. Things have changed. There are many instruments now. People also have disposable income.

    • Thank you, sir. In fact, it seems to me that one generation earlier people believed in the concept of saving but there was not much awareness about investing. I have seen my parents and inlaws depositing money in insurance and FDs. Also as you say the disposable income was very limited earlier but now with more disposable income people are in a better position to invest. I think it helps a lot to start systematically investing in some appropriate long-term scheme at the start of the career, even with a small amount.

      • True. Still many people do not trust mutual funds which fluctuate with market. Number of people with disposable income has increased, but still small compared to our population size. Majority still like safe options like Provident Fund and LIC. Things are changing with aggressive marketing, flexibility of plans and lowering limit and lick in period.

  • ULIP sounds like smart and win-win investment, Somali. An interesting post on setting our objectives both short, medium and long terms as well as the need to flesh out priorities that can serve as a guide. Honestly, I never thought about it and need to weigh my investment options.

  • It is so important to have goals and life planning. As you said, short, medium and long term goals can help us reach these goals. Often we won’t meet our goals overnight, and we have to be consistent in how we go about achieving them – always thinking about them, doing something to work towards these goals. It is amazing how you completed your MBA sometime later down the track, and it sounded like a lot of spending wisely on your part. Good on you :)

    All of us have different life goals. For instance, I know someone who is like a free spirit, keen on traveling the world and not wanting to stay in a place for too long. Then I also know someone who doesn’t like traveling the world but prefers to invest their time in video games or collections.

    For me, what I want for the future is a steady job, a roof over my head and of course to finally publish my book. Some of these goals I have achieved already…but we all know my book is still yet to come. With my book, I aim to be self-publishing, so I will need to plan and take account into the publishing and marketing costs – and from the looks of it, it might amount to more than I think :D

    • True Mabel, Goals are seldom met overnight. Persistent efforts help though. Whatever lifestyle a person wants to live, like a lifestyle of travel or, travelling from place to place, or pursuing a hobby, or publishing and marketing a book like you do, or even taking a blog to the next level ;) everything requires money. So, yes we all need to plan out for all such expenses. Thanks a lot for sharing your views, Mabel. Have a lovely weekend.

  • Investment in our country was never scientific or logical. It was always about getting tips and connections. I’m glad you brought it up for everyone to see things in correct perspective.

  • A nice post on investing. We wish to be an investor but like to see profits of a trader and in the process we lose. One need to remain invested for a longer duration and not get swayed by daily ups and downs or friendly tips etc.

  • Yes Somali we have all gone through the challenge of studies and higher studies which was funded by our parents and who didn’t have the options and opportunities to have enough wealth to support us beyond a point, though they had with their limited earning earmarked the money for various purpose and children education in particular.

    I agree goal based financial planning is so important and if done with proper knowledge and strictly follow the set goal plan, one can get so much back in life what one aspires and dreams are what we need translates into reality and money plays such an important part and we do take it for granted and we then find ourselves stuck due to financial constraints and education needs money give the cost of education especially the higher education and abroad education is not affordable to middle class family like us where we didn’t have the sources or inheritance of wealth.

    Given the today’s lifestyle where there is generally feeling that we all live for the present and things change so fast in today’s world we don’t know how to respond and accommodate such demands of life…financial planning and such investment are of critical need, and these needs proper understanding of the plans and discipline in the way we live life and spend our earnings.
    Nice to see you being part of such conferences and gatherings where get to know so many new aspects, and the power is in sharing those wonderful knowledge that we gather and you do it brilliantly.

    • Thank you very much, Nihar. Yes, the earlier generations (including the middle class) had limited options for investment. Fortunately, the avenues are opening up and we have much wider choices, Creating awareness around the concepts of investment and reiterating those encourage us to think and develop clarity on what we want at which stage of life.
      Hope you enjoyed the Republic Day ad the long weekend,

      • Yes Somali, this vast range of options and financial instruments that are available today are not easy to be be understood by common investors and needs the support of the experts and proper guidance to get it right…and financial planning is something today’s generation don’t give the importance it needed. Most of them live for present and future is something they take it the way it comes, and that was not the case with the earlier generation…perhaps changing time and we need embrace this new dimensions in our life.

        Yes Somali, had good long weekend and now no such weekend till April, I guess.

  • Somali, I am clueless about the offers regarding investment but I sure know that everyone MUST save.If you have ten bucks, save 1. However, a proper investment guide can actually make you reap benefits through your hard earned and saved money. Nice post, girl!👌

    • True Kokila, If you have ten bucks, save 1, and save in a way that the saved buck keeps growing at a rate higher than the inflation.. Additionally, decide the amount that you need to invest,based on the things that you aspire for in life.
      Hope you had a fun filled long weekend. :-)

  • Planned investment is really important. Especially for the education of our children. A proper investment plan can prove to be the most helpful friend in life.

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