Smart Goals

Planning for Success...

Posted by Harsh on April 29, 2020 · 6 mins read
"A goal without a plan is just a wish" - Antoine de Saint-Exupéry

I hope you have done your analysis on your spending habits and started saving money by cutting down your undesired wants and spending habits.

Now, We have some amount of cash in our hands to start investing in various available options in the market. Some of you might already be started investing in mutual funds but before started investing in any instrument, think for a second and ask yourself a question Do I have any specific goal to Invest?

If your answer is No, Then it sounds like "you are sitting in a taxi and asking a driver to just move wherever he wants to go and when he asks for a destination, you just tell him keep going I will tell you where I want to go afterward. this should not belong to us, right? We should have a destination to go in journey as well as in investment. We must have a specific goal and a plan to fulfill it, So let's check out how to set our smart goals in investing.

Smart Goals

Let's understand it in terms of investing by an example. The actual scenario might different and it's based on the individual.

Specific - I want to buy a car.
- Here, I want to buy something and that is a car, so it's a specific goal.

Measurable - I need to save 10 Lacs to buy a car.
- Here, I require specific amount that will need in future to buy a car which is measurable.

Time Based - I want to buy a car in 2 years.
- Here, I defined my time frame that is 2 years. Within that time I have to save 10 lacs to fulfill my requirements.

Attainable & Realistic
- These 2 go in line with each other if I said that I want to buy a ferrari in 2 years, It's neither attainable nor realistic in near future.

We need to set smart goals that can be achievable and realistic otherwise sometimes it will lead to disappointment by not achieving it. So before starting set smart goals and based on that decide which investment option is suitable for you.

Now, we know What is smart goals, and How to set smart goals? But do we actually know how to achieve them? So let's checkout How to achieve smart goals ? 🎯

To achieve goals arrange them in order of their time to reach. Usually, goals can be divided into 3 parts.

Short Term - (0-2 yrs)
Medium Term - (2-7 yrs)
Long Term - (7 yrs and more)

Now, again these categories depend on individuals some of you might have just started working, some have just married, some might have at the age of thier retirment. So as per your requirement, categories your goals based on time and start investing accordingly.

We will now see various investment options available. But wait, every good story has a villain!!! Then think who is the villain in our story that stop us to achieve our goals ?

"Inflation is taxation without legislation." - Milton Friedman
"Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time." - Wikipedia
rate in India from 1984 to 2024 (compared to the previous year)
sources:- Statista

How inflation effect our investment ?

Today, you bought some goods for 100 rupees at the inflation rate of 4%, a year later to buy the same quantity of goods you need to pay 104 or you can say that value of money decreased by 4 rupees.
Suppose you have parked 1,00,000 Rs in fixed deposit at the interest rate of 7%.

  Initial Investment    - 1,00,000
  Interest Rate         - 7%
  1 yr Return           - 1,07,000
  Inflation Rate        - 4%
  Net Return            - 1,03,000
After a year net return is 1,03,000 which is only 3% of your investment.

You might have question how can we beat or reduce the effect of inflation on our investment? for that you need to be familier with 8th wonder of world and that we will have some interesting talk in next blog upto that "STAY HOME STAY SAFE".✌️😀

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