Follow these steps to to achieve your financial goals

• Follow

Warren Buffett once famously said: “Someone’s sitting in the shade today because someone planted a tree a long time ago”.

Building wealth is a long process with obstacles along the way and sometimes they are unavoidable. The key lies in financial planning. You need to have a financial plan to invest in your future and attain financial security.

Set Goals

Financial planning can never be same for two individuals. It is therefore important to identify your goals and put numbers to it. You need to know after how many years you need the money and how much will be needed. Once you know how much you want to save for your child you will start saving regularly to achieve it. You need to know what are your goals and define them, preferably write them down as it gives a clear vision and clarity about your goals.

Develop a Plan

Once you identify your goals have a time frame for each of your goals. Classify them as short, medium and long term goals based on the number of years left to achieve them. After identifying the time frame you need to link it with your risk appetite and based on it select the product. For example if you want to save for your investment but want to invest only in risk free instruments then PPF is one of the best ways. For people who want to invest in mutual funds there is a further categorisation based on risk appetite. For example:

• For goals which are within one year invest in liquid funds
• For short term which are around 3 years away it is advisable go for for debt funds
• For long term goals which are at least 5 years away you can go for equity funds
• For tax saving purpose invest in Equity linked saving plans

Most importantly, smart investing is not about putting all your eggs in the same basket – it is about growth through diversification and informed decision-making. Diversification is important because we as Indians shy away from investing in financial assets. But this is not smart investing as a well rounded portfolio should be diversified and have all components ranging from equities, debt along with protection of insurance cover.

Monitor and Review Goals

Various circumstances can lead you to review and modify your portfolio. After starting your investments do ask have you achieved the returns from your investments that you had anticipated? Is there better investment opportunity?

Based on these, do not hesitate from revisiting and realigning your investments.