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5 Tips For Goal Planning Success

Here are five things to keep in mind as you undertake the arduous journey towards the achievement of your financial goals

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We often forget that money is really just a means to an end! And that’s exactly why having a goal-based financial plan in place is of paramount importance. Keeping your eyes on the prize when it comes to saving money can have a profoundly positive impact not just on your future wealth creation, but on your peace of mind too. That said, here are five things to keep in mind as you undertake the arduous journey towards the achievement of your financial goals. Be warned – some of them may fly in the face of what you’ve believed to be true thus far!

Avoid Packaged Investment Solutions
When it comes to goal planning, it’s best to avoid packaged products that aim to kill two birds with one stone – for instance, child education linked insurance plans that aim to solve the two very legitimate needs of ‘saving’ and ‘goal protection’. Packaged products tend to have opaquely defined benefits and higher than average inbuilt costs. It’s better to stick with regular investments that only aim to solve a single need.

Ignore your Risk Profile
Very often, we become fixated upon our individual risk-taking ability, and therefore end up committing even long-term savings (for instance, retirement savings that may have a 25-30-year accumulation period) to low risk, low return assets such as insurance or PPF. This can make a massive difference to your final corpus accumulation over the years. When it comes to goal planning, the sole determinant of your investment instrument should be your time horizon and nothing else.

Cover your Risks
How is risk management related to goal planning, you ask? In two ways, actually. One, not having adequate medical coverage, critical illness coverage or personal accident coverage can result in ‘money drain’ situations if you’re unlucky, and this may severely impinge upon your long-term goals. Two, the unfortunate and untimely loss of life of a primary breadwinner may end up compromising important financial goals altogether. Make sure all your bases are covered.

Track them in real time
There’s a reason why Karl Pearson said “what is measured, improves”. It’s one thing to form a loose understanding of your future goals and save for them in an ad-hoc manner. It’s quite another thing to map your regular savings into a software program that tracks and measures your progress towards your goals in real time. Doing the latter can dramatically improve your chances of achieving your goals, by adding to your commitment and alignment – and even adding a ‘fun’ element to your whole goal-based saving process!

Be aware of your worst enemy

The No. 1 enemy of your Financial Goals is a syndrome called ‘hyperbolic discounting’ – a very commonly ingrained mental trap that makes as assign exponentially higher significances to near-term goals. This is the reason why upgrading your car tomorrow may seem more important than saving for your child’s education goal which is a decade away. Remember, even seemingly harmless drawings on your goal-based savings, especially early on in your savings cycle, can have a profoundly detrimental impact on your overall success. You’ll need to beat the hyperbolic discounting syndrome to stay ahead in the game!

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