Goal Based Investment: Your Path to Financial Success

After the 2008 Great Recession, many financial advisors shifted their clients towards goal-based investment.

This type of investment made a clear idea for investors. On what they are investing in and what is the expected outcome. The goals may differ, but the investment for a particular goal makes it achieved and makes investors happy.

Importance of Goal Based Investments:

  • The total investment will be on goals than profits. This type of investment has a fixed period and the expected outcome.
  • The goals may be a dream home, car, retirement, emergency fund, children’s education, marriage, etc.
  • This type of investment has proper planning and it should be reviewed periodically.
  • In terms of the financial planner, the top priority will be their client’s needs and goals. Not on portfolio returns beating the benchmark.
  • There is no need for corrections in investments now and then. Goal-based investment lays a perfect road map for investor’s needs.

Example: If the client needs to save for their children’s higher education which is within 10 years the amount will be 25 lakhs. This has already stated the advisor on the tenure and the capital required. The client seeks a decent return of 10% and it should be of low risk. The advisor can easily draft an investment plan.

Goal Based Investment vs Traditional Investment:

  • Traditional investments don’t have a particular goal. The main aim of the investment is to become rich create some corpus, or beat inflation.
  • Since the traditional investment is growth-oriented, the human mentality will be searching for more return. This will never end greed in investors.
  • When we don’t have a goal on investment, the fund that is performing currently will please our eye. We will shift our investments toward those funds, which will be of high value. The next year when it falls makes a bleed in investor’s hearts.
  • In traditional investing, we only look at returns and not at the risk appetite of the investment.
  • In Goal-based investment, we completely plan our investment with a connection with goals, tenure, and risk appetite. So the chance of barter between our funds is not required.

Asset Allocation – Goal Based:

  • 90% of our asset allocation works well if we go by goal-based investments.
  • Asset allocation should have all types of investments like fixed income instruments, debt funds, bonds, equity mutual funds, shares, golds, etc.
  • We have to predefine what class of assets is allocated for a goal.
  • For example, for retirement at age 60. The asset allocation will be having EPF which will have a major portion, PPF, a Few equity assets, and some bonds.
  • When investments are planned based on Goals, there will be less chance of tracking errors. So, it doesn’t make investors panic in any situation.
  • The investor will be sure of what he is investing in and how long to invest if he has a clear goal.

Advantages of Goal Based Investment:

  • Easy to understand the portfolio management of investments.
  • It will increase the appetite for achieving more goals through investments.
  • Gold based investments give priority to life satisfaction and living life happily.
  • It removes a greedy mindset by fixing a minimal rate of return, unlike the other types of investors.


  • Be a goal-based investor, so your goals and investments will be aligned in the same route.
  • Goal-based Investors know how to manage the risk as they are well prepared with the proper plan.
  • Goal-based investments are safe and will give satisfaction in life.