When it comes to investments, there would always be a bit of uncertainty when you have invested in equity based products. If you are afraid of taking risks or don’t want any quotient of uncertainty, investing in fixed-returns securities may sound good.
However, the problem here is that it would not help you create wealth over time. You would want your investments to earn you considerable money over a period of time, and it calls for increasing your risk tolerance a bit. To create wealth, you would have to add market-linked investment tools to your investment portfolio invariably.
Having an investment goal and a well-crafted investment strategy would cut down the uncertainty quotient to a great extent in such a scenario. Investing without a plan would not provide you the results that you have been looking for. You can create that on your own or take the help of an expert. Having a goal can help in many ways, such as –
Avoid Panic
When you have invested in market-linked products, you might see your portfolio in red at times when the market is going through a major correction. However, when you have a goal in place that calls for staying invested for the next five to ten years, there is no need to panic immediately. You would know that the market will overturn itself in due course, and your investments have enough time to recover as the market soars gradually. Without a goal, it is easy to panic when the market corrects, and many people in such situations end up exiting and suffering loss. When you have a plan in place, you prepare for all situations and help you deal better with emergency situations.
Allocate Your Funds Better with Pre-defined Goals
Depending on the tenure of goals in terms of short-term and long-term, you would know whether to invest in equity-based products or debt-based mutual funds such as l & t mutual fund direct plans or fixed deposits. If you are looking to invest for your retirement that is still over a decade away, staying invested in the equity-linked products would help you get better returns.
It would not cause you anxiety when the market is declining. For financial requirements that are just a couple of years, investing in debt based mutual funds is a much better option. It would keep your investments safe from market volatility even if the returns are not very generous. Having goals would let you know how to channel your money to different investments so that each investment is working to fulfill a specific objective.
Enjoy Your Money by Defining Goals
Even though the returns on the investments are usually identified well in advance, any returns generated higher than usual would help you enjoy your money. It is because you would be able to identify the surplus and can use it to improve your lifestyle.
Stay disciplined with your investment strategy, and you would notice surplus money flowing in from each of your investments. In addition, if you ever feel like spending on yourself, you will not feel guilty doing so because you know exactly how to make up for it by increasing your investments for the next term.
Fill in Shortfalls with Defined Goals
Sometimes, you might fall short of money even before you have reached your goal. When you have a goal, and you are monitoring your progress, you will be able to identify the shortfall before it gets worse.
A goal will help you identify the steps you can take to fill it. You can lower your expenses until you have achieved your financial goals. You will be able to set your priorities straight so that you do not lose sight on your long term goals because of the small hiccups in the way.
If you want to secure your future, investing your money early in life is the first step towards it. But, before you invest, you need to identify what your goals are and then work towards it. When you have quantifiable objects in front, you will be in a better position to work towards it and achieve it. Goals will prevent you from spending more than you can afford and help you be on track to your financial freedom path.
