CA Nitesh Buddhadev
As you all are aware, without KYC you cannot start your investment. I wish it was equally mandatory to have KYG (Know Your Goals) !
As we believe, 'People Don't plan to fail but They Fail to plan.'
Everyone has their own list of Goals such as vacations, child's education, child's marriage, a bigger house, a holiday home, a dream car, a peaceful retirement, etc. All of these Goals, have a financial implication. To accomplish these, we either take a loan or make an investment or a combination of both.
Generally, following are the Goals as per human life cycle.
Definition of SMART Goals
Lets make it more Simple. Ask yourself following 4 questions for SMART Goal setting.
We will see one example of setting a SMART Goal.
Say, Mr. Kapoor has a daughter aged 3 years. One of the Goals he is considering in the Financial Plan is Child's Education.
| Goal Details | Post Graduation |
| Fund Required at Today's Cost | Rs 15,00,000 |
| Child's Age will be | 21 years |
| Goal Year | 2036 |
| Inflation (Education Inflation is considered @10% based on data available) |
10% |
| Future Value (Corpus Required in 2036) | Rs 83,50,000 |
YES! You read it right, Rs 15,00,000 Today will cost you approx Rs 83,50,000 in 2036.
So, if the Goals are not appropriately set we may have to use our Retirement Corpus or other investments for this Goal and I am sure no one will allow their child's education to suffer because of lack of funds. But what we will compromise here as our Retirement Corpus will also impact us in Future. So take caution in setting Financial Goals.
The SMART Goal here in the example is : Mr. Kapoor requires Rs 83,50,000 in 2036 for his daughter's Post Graduation. Now, Mr. Kapoor has 3 choices to achieve this Goal:
| Particulars | % in CAGR* | ||
| 7% | 10% | 12% | |
| Monthly Investment Required | 19,400 | 13,900 | 11,000 |
| OR | |||
| Invest Lumpsum | 23,95,000 | 14,11,000 | 9,94,000 |
*Compounded Annual Growth Rate
This is one of the many Goals Mr. Kapoor will consider as a part of his Financial Plan.
Guys, Please Remember, its Personal Finance, always personalise it. Define your own Goals and get a customised Financial Plan for yourself. What may be applicable to one person may not be applicable to another.
We will help you to set your Financial Goals and Develop a customised Financial Plan for yourself.
By: CA Nitesh Buddhadev and CA Mitsu Buddhadev
The authors can also be reached at info@nimitwealthmanagement.com
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