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Growing your wealth takes proper financial strategy. Explore how you can get the best out of your investments with the mix and match of time horizons and risk levels.
We often refrain from investing and saving due to persistent lag in confidence and uneasy plans. A goal based savings plan can help us prevent this from posing a severe impact on our long term financial wealth and stability.
While we all desire comfort and are keen on chasing it, we don’t know how to make the comfort chase us. But if you make savings a habit, you’ll realise it isn’t that complex.
With consistent efforts, it can create a firm financial foundation for your comfort life. On top of that, developing savings as a habit is now easy and rewarding.
With a healthy savings plan, you can grow your wealth. But, how to start? Firstly, for anyone starting out a savings plan, it is important to set a goal.
A savings or investment plan without a goal is like dropping a message in the never ending ocean inside a bottle and hoping it’ll reach the specific significant who lives in plains!
Well, keeping aside the overwhelming metaphors, we can simply understand that to accumulate a good amount of wealth, your savings can prove to be exceptionally beneficial.
But, why accumulate wealth? The answer lies in the fact that in many countries, including the developed nations, there is no wealth tax imposition.
That is, you may not have cash but have enormous wealth and live a pink life. Many of the most successful billionaires are billionaires because of their wealth and that too, because of their excellent foresight regarding investments and savings.
What actually is a goal-based savings plan?
Let’s make terminologies simpler for you. So, what actually is a goal-based savings plan? In laymans’ words, it refers to a savings plan that is planned to be exclusively devoted to a certain goal and can be either short-term or long-term.
For short-term goals, say, you may want to buy a car. For medium-term goals, you may want to build your own house. For a long-term plan, you may simply wish to accumulate enough wealth for a secured retirement plan.
All the financial plans can turn out to be profitable only if there is a goal factor attached to it. Human psychology naturally makes us more inclined towards a certain thing if we already know the reward that we will be achieving. In this case, the achievement of a goal is what will keep you going in your savings path.
Why goal-based saving?
A goal-based savings plan will definitely give a smooth direction to your investment/ savings.
With the crystal clear picture of how much you should be ideally saving for your that specific goal, you will be more keen on achieving it and become consistent in your efforts.
The absence of recklessness in short term goals, your willpower won’t fade away too soon and the chances of being able to set up a long term plan will start to bloom.
You will, on the whole, become more aware of your finances. This might make you money-smart enough to even plan out your taxes and save a lot on them.
In the end, it all boils down to conditioning your financial backup and eradicating hassles in your financial life.
Do you know about the power of consistency? The more you spend, the more you save.
Kinds of financial goals:
- Ultra short-term goals: Financial goals within a time range of less than a year. These goals don't take much time to get accomplished. For example, buying yourself a bike.
- Short-term goals: Financial goals within a time range of 1 to 3 years. For example, if you plan to own a new vehicle, this plan will work the best for you. All that is to be taken care of is the aversion to risks. Don’t make it too risky, ease out the plan and invest smartly.
- Medium-term goals: Financial goals with a time range of 3 to 7 years. The biggest kick here is the variability in your investment profile. If you can mix and balance, they are very easy to accomplish.
- Long-term goals: Financial goals within a time horizon of 7 to 10 years. With plenty of time, you can take risks here.
Broadening the approach: investment plans for different time horizons
1. Short-term Investing:
Under the umbrella of short-term goals, the time is pretty limited. With just 2-3 years in hand, you will have to plan out a protected investment plan that is easy to deal with, matures early and reaps a good amount of return.
Remember, here, you need to quantify your proceedings and never miss out on the inflation rate since you wouldn’t want the nominal hike to eat up your real objectives.
Some of the ideal areas to invest for short-term goals can be Digital Gold, Debt Mutual Funds, Bank Fixed Deposits, etc..
2. Medium-term Investment:
Since medium term plans let you float between short and long plans, you can easily bring in variability in your investing.
Just figure out a risk-balanced plan and your finances will be good to go on.
By combining quite risky equity funds with much safer debt mutual funds or Digital Gold, you can eliminate the risk and reap higher returns.
Another way out is to combine stocks and bonds. With the play surrounding index, this combo can genuinely do wonders.
3. Long-term Investment:
Pertaining to the accessibility to around 10 years, long term goals give you enough time to experiment and take on more risks.
Within such a wide span of time, you would want to plan out your investment or may even start your own gig!
These goals get you familiarised with ups and downs of finances and eliminates the risk aversion in you.
Some of the best investment options for this time horizon are equity stocks, equity mutual funds, etc..
This was the elaboration of the crucial minutes of a strong financial strategy. Growing wealth will take time.
The tip is to be patient and consistent in your efforts. Setting different goals will reap you amazing results.
On a plus point, trying out small goals and accomplishing them will boost your confidence to take on risks. Needless to state, risk is the way to big goals.
Jar app can help you achieve all your goals with it’s easy and smart savings and investment plans.
You can create a habit of savings by auto investing small sums in Digital Gold, which can be redeemed or withdrawn whenever you want to your e-wallets or bank account.
You can fulfill several desires of yours with Jar, such as:
- Buy gold for your marriage.
- Save money to buy a gift for parent's anniversary.
- Save for your next solo or family trip.
- Plan finances for your kid's education.
- Plan finances for starting your business or to invest in your favourite stocks.
- Save money for better money control and financial control.
- Buy digital gold for a secure future.
- Plan finances for buying your dream car, home, phone or laptop.
- Plan finances for emergency money requirements.