Goal Based Financial Planning

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  •   +91 94281 01060
    +91 9825466771
  •  wealth@davefintech.com

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Goal-Based Financial Planning Process


The road to your financial goals requires a map in the form of an investment process.

Goal Based Investing

We all have dreams and desires, but most of us do not plan our investments according to our goals. Whether it is for child’s education or marriage, retirement planning, tax savings, dream car, house or vacation, you need to plan for future requirement. Goal based investing adds direction to an investment. It is a structured, well thought out process for investing, where you know the purpose behind each rupee that is being invested. In Goal based investing, performance is measured by the success of investments in meeting an individual’s personal and lifestyle goals.

Plan for your Goals

The following are different types of goals. The below list is indicative and depends on life stage and ambitions of each individual.

  1. Short-term:  Has a time frame of few months to couple of years. It covers immediate goals such as going for foreign vacation.
  2. Mid-term:  Involves a time frame from one to five years. Midterm goals include buying a car or starting a business.
  3. Long-term: Involves plans that are more than five years. It includes goals such as retirement or child’s education or marriage.

For instance, “I wish to accumulate Rs 25 lakh by 2025 to fund my kid’s higher education” is an example of a SMART goal. Also consider inflation, while computing the future value of your goals. Assuming the current cost of funding your daughter’s education is Rs 5 lakh. After five years, you would require Rs 6.38 lakh, assuming an inflation rate of 5%.

Hence, you should work with your financial advisor review your goals, say annually and update for any major life changes.

Unlike traditional financial planning and investment, the client’s portfolio is not managed as a singular portfolio. Instead, these are broken into sub-portfolios which are dedicated to individual goals. These sub-portfolios are optimized according to risk appetite and time horizon. In addition, risk, performance and growth are not measured against volatility, benchmark and returns only, it is measured by the progress against the achievement of goals.

The first step in goal-based financial planning is to define client’s goals and priorities. This process gives the client the opportunity to think deeply about what they really want, when they want it (Duration) and what they need to do – they provide them with greater clarity of purpose. We provide Goal achievable Wealth creation plan which will be unique to each client to meet their specialized requirements.

Once the client’s objective has been fixed and clear, we can move forward to develop financial plan. Every goal “bucket” becomes a place where it is a good place to achieve the goal. Optimal asset allocation, goal specifications, Risk capacity and duration of Investment are important factors to make Wealth creation Plan.

This is different from traditional financial planning and consider holistic approach of Financial Plan which can meet many small/big goals of clients.

To make it effective, clients must actively engage and communicate true data. The client must follow any life or goal change accurately and we will track the progress made to the customer’s objectives, adjusting as necessary for Timely application of goals.

The straightforward and disciplined approach at DAVE FINTECH WEALTH ADVISORS will make it easy for you to follow each step on your journey and will help you move toward meeting your objectives and long term goals.

  1. Step 1:  Complete Financial Analysis
  2. Step 2 :  Risk Profile check
  3. Step 3:  Portfolio Construction
  4. Step 4:  Implement the Asset allocation Strategy
  5. Step 5:  Monitor Performance

Traditional planning does not think that different objectives compete for the same money and yield results at different times; It is expected that the investors will take a lump sum and are giving themselves to today and after retirement. Targeted planning: Objective funding with optimum asset settlement, to pursue returns or to discourage competitive segmentation – Client need not compare goals.

What can be your goals?

Any or all of the following:

  1. Buying a house
  2. Buying a car
  3. Children’s education
  4. Children’s marriage
  5. Retirement planning
  6. Aiming for early retirement
  7. International holiday (one time or recurring)
  8. Purchasing other high-value items like a diamond ring for your wife
  9. Putting an Emergency Fund in place
  10. Modifying/Renovating your house
  11. Starting a business

Having a goal helps you know exactly why you are doing investment and when the same can be utilized to achieve goal.

In investing, having well-defined financial goals help tell you the following:

    1. How much you need to achieve this goal today? [ Investment Amount]
    2. How much more will the goal cost in future? [ Cost of Delay in Investment]
    3. How much time is left to save and invest for the goal? [ Duration of Investment]
    4. How much you need to invest (regularly or one time) to achieve the goal?

And these are important questions.

So why goals?

Because they help keep the ‘real need’ of money on top of your mind. And that is important. To ensure that you stay motivated to keep investing sensibly for long time.Goal-based financial planning in India is a method which allows clients to save for various financial goals in different time horizons. The planning process helps describe a person’s or family goals, gives them priority and determines the best way to get them funded – considering both tangible and non-tangible assets, and how they affect each other.

The benefits of this approach are many but some of the important things are:

The objective with clarity

– The nature of the process encourages the client to think seriously about what they want and then it explains. This will enable the client to better understand their goals and priorities.

Good alignment of assets for future responsibilities

– The goal priority is to split investments into separate belts and take advantage of different risk profile-diversification and time horizons and individually optimize sub-portfolio and maximize the efficiency of everyone.

Reducing emotional decisions

– Understanding the needs of the clients provides client with a concrete objective. Keeping the goal in mind reduces the chances of clients responding to market fluctuations. If they are working towards a goal then they do not follow the returns can leads to minimize the emotional decisions.

Wealth Optimiser

– It has been proven that people who work for specific things work well enough. Using the goal based method of financial planning, the average alpha in the portfolio can grow up to only 1.65%, according to a survey. An investor is measuring how much satisfaction he/she gets from reaching his/her goal.