How to set your financial goals and achieve successfully?

Financial Goals
Financial Goal planning and how to invest

Everyone dreams to live a grand life and there should be an abundance of wealth available for disposal on things to enjoy, whenever they want and require.

Primarily, creating wealth is a long-term process based on our sources of income from jobs and businesses. However, for 80% of the people on this planet do hardship to earn and grow their money.

In other words, most people have limited funds to spend on different things and requirements in their life. To give focus to our big spending, you need to prioritise your main targets and set your financial goals, to attain those successfully and weed out unwanted expenditures.

Resulting, we need to identify our financial goals, meaning, those events and timelines in our life, wherein, we require large sum of money to fulfil our dream objectives.

What is financial goal planning?

Financial goal planning is the process of identifying and plan to accumulate a particular amount of money, required at an important stage of our life.

Basically, we ascertain a goal, say, child’s education or your retirement, and decide an amount and timelines, for which it will be required at a later stage and saving regularly and adequately, to accomplish it successfully.

Mostly, these financials goals are non-negotiable and vital in our lives to sustain, secure and improve our standard of living of our family.

How to set your financial goals?

Set your financial goals first.
Plan your expenditures and save more

We have understood that what is a financial goal. Now, it is also significant to ascertain your financials goals and list it down as a financial plan you want to achieve for your family in the future.

As I mentioned, there are three main ingredients, which are important to How to set your financial goals and achieve successfully:

  1. The goal you want to achieve.
  2. The amount required.
  3. The timelines in which you want to achieve it (preferably a date).

Let’s take some examples to set your financial goals for a household, in the table below: –

Name of goalsAmountTimelines (in years)
New House200000010
New Car10000005
Child’s Higher Education300000015
World Tour5000005
Child’s Marriage200000020

List down your all the goals with discussion with your family and calculate the amount keeping in mind the Inflation, according to your respective countries.

Inflation is an important factor to consider, while calculating the amount of a particular goal, the rate of inflation may vary from region to region. So, you may refer long term inflation rate in your country while you set your financial goals.

This rate of inflation will be deducted from your yearly growth your funds, because, inflation eats out your savings due to increase in general prices of houses, cars, education and others.

Resulting, the sum of money for a goal should be calculated according the present prices adding annual inflation rate, to ascertain the real amount required in the future.

Let’s take another example and calculation as to how to arrive at an actual target amount down payment of 2000000 for the first goal, as mentioned earlier table.

Calculations are mentioned below: –

DetailsRate of returnYearsMonthly Investment Required
Regular Return101010000
Inflation adjusted (4%)61012500

According to above calculations, you need to invest 10000 per month for to result in 2000000 amount after 10 years, at a supposed rate of return 10%. However, if the inflation is taken into account, you need to invest 12500 per month to get to the same target amount.

You can find SIP calculator on the internet or calculate above amount through MS excel, which will help you calculating and to set your financial goals.

However, returns should be considered after adjusting the inflation rate, for your financial goals. The format in excel may look like as below:-

GoalPeriod (Years)Present ValueInflationFuture ValueMonthsReturn % ExpectationPer month investments
House Down payment10 ₹   20000004%296048912010%14500
Higher Education1530000004%360189018010%8500


  1. Present value is the present cost of that goal, which suffice the sum of money required for the same goal currently.
  2. However, when we adjust the rate of return by inflation rate, which resulted in the future value, will always be more due to rate of inflation in the country.
  3. Thus, our actual target of financial goal becomes the ‘future value’, which you have to accomplish at the end of the said period.
  4. Here, I have presumed that we will be able to contribute our investments each month, that is why, per month investments are to be made to achieve the future value with return on investments as 10% average for each year.

Likewise, you may list down your financial goals with the date in mind, so that, calculations can be made for the amount needed in the future.

Where to invest to achieve your financial goals?

You have understood about how to develop and set your financial goals, in the form of sum of money required at definite period of time. Now, next step is where to invest your money intelligently, so that you reach your goals comfortably and get maximum returns.

First, you should split your financial goals into different timeframes, based on years, as shown below:

Short Period Goals in 3 years or less
Medium term Goals in 3 to 5 years
Long term Goals in 5 to 10 years
Very long term 10, 20, 30 and so on.

Based on the time period mentioned above, you can allocate your investments into different asset classes to invest. Because different assets have different risks and return expectations and we can invest in those assets accordingly.

Generally, short period financial targets are allocated to very low risk and decent returns asset classes, such as, fixed incomes or bank fixed deposits.

However, if the financial goals have more than 10 years to complete, you can go for high risk and high return assets classes, for instance, equities markets.

Secondly, there are different assets classes to invest for best results for your financial goals are given below:

Type of Asset classes
International Equity
Real Estate

Finally, I have made a model Asset class matrix, across the various time periods, for more understanding, clarity and simplicity. Resulting, you can set your financial goals yourself and develop a similar model for your successful financial life.

Below is the matrix you may follow for goal planning: –

Goal PeriodTimeframeTarget Investment Options
Short Period Goals in 3 years or lessFixed deposits, Government securities, Debt Funds: short and long term and Bonds.
Medium term Goals in 3 to 5 yearsBonds, Fixed deposits, Hybrid Mutual Funds, Long term Debt Funds, corporate bonds, debentures and Gold.
Long term Goals in 5 to 10 yearsLarge Cap Mutual Funds, Long term Debt Funds and Multi cap Funds, ETFs, Index funds, Gold and Real Estate.
Very long term 10, 20, 30 and so on.Multi Cap, Flexi Cap Funds, Stocks, Mid and Small Cap mutual Funds, ETFs, Index funds, and partially in real estate and gold.

Watch: How to invest and set your financial goals (Hindi)

Important to note, to set your financial goals that, there are some of the investment classes not shown in every type of investment period, that is because of their nature of risk and volatility.

For instance, equity related assets, such as, direct equity and mutual funds, will be a risky investment in less than 3 years period. 

Moreover, there other asset classes, like, art, wines, crypto currencies and other valuable assets, which are not considered here, due to limited history and expertise to invest.

Read: Best Mutual funds to invest in 2021

Points to Note:

  1. Try not to mix insurance with investments because it fails both of the objectives of risk cover and return on investments, due higher charges and low long-term returns.
  2. Most importantly, you must always want to your own risk assessment and accordingly take risk cover, such as, term life insurance, health insurance and others, to protect your family financially.
  3. Do not tamper with the investment plan due to short term difficulties in your finances or up and downs in the investments returns.
  4. Allocate all your investments to the fixed deposits of safe heavens before 1-2 years of your financial goal target year, to eradicate any uncertainty in the overall returns.
  5. Track your investments after 1 to 2 years, to check the performance of the schemes you invested in. If required, change the scheme but in the same type of asset class.

Fast-track your Financial Goals success !!

Achieving financial goals faster
Smart Investor on fast track of achieving financial goals

1. Increase your savings:

In case, you fall short of your monthly required investments, then you must increase your savings to invest more for successfully accomplishing your financial goals, because future cost will be higher from the present stage.

2. Make a Budget:

Making your monthly or weekly budget for household expenses and savings brings you visibility towards your financial goals. Write down every income and expenditure. Target your expenditures in a month and try not to exceed those, additionally, target the amount of savings you will be doing every month set your financial goals.

3. Reduce your Debts and loans:

If you want to accelerate your investments and reach to target goals, you must reduce your debts, which will result in more cashflow for you and avoid unnecessary interest cost.

Build your assets, which will fetch you money, such as, real estate for rental income and equities for dividends and good returns. Reduce liabilities, such as, expensive cars and gadgets, their value will erode over time. Distinguish between your needs and desires and avoid unwanted desires to save more money and to invest.

4. Invest your bonuses and extra incomes received:

There are good chances that you get a pay hike and bonuses, or increase in profitability in your businesses each year. Step up your investments every year periodically by 10%, without thinking about the market conditions and best time to invest.

5. Invest in yourself:

Skilling and re-skilling yourself to remain relevant to the job market and learning new age skills, such as, digital, data, graphics, marketing, business transformation and others will also help to build your side income.

Leaning new technologies will make sure your future cash flows remain intact and even enhanced to invest more towards your financial goals.

6. Key is to be Consistent for long period of time:

There are no magical or specific pathway to achieve your financial goals faster, what matters is your consistency in investing your funds for long period or target period of time of a goal. This is because of compounding effect on your investments, meaning, interest on interest, will add to the acceleration towards your target amount.

Understanding by an Example:

For instance, to set your financial goals, take a target goal of your retirement fund, that you have to build in next 30 years. Some will say that, 30 years is a lot of time to build corpus for retirement and we can start after some years.

But it is the time period which will always support in low investment and high returns or goal amount, without sweating too much on forced investments.

Secondly, the asset class you have to choose should have the successful track record of 20 to 30 years in terms of returns on investments. As mentioned in the above table, the investments class which performed best in the long run are equities related investments.

Because, equities have given best returns in the past and not too difficult to track its performances, you may invest in mutual funds, ETFs, Index funds and so on. On an average, equities have given 14% returns in the last three decades in India and almost 7% in U.S.

Finally, calculating the retirement amount by just investing Rs. 5000 per month, you will be amazed to see the amount you accumulated after 30 years with above mentioned equities returns: –

ParticularsInvest 5000 each month, for 30 years, @14% ROI
Amount invested₹ 18,00,000
Est. Returns₹ 2,59,85,278
Total Value2,77,85,278

Just starting your investments in your mid-twenties and increase period by 5 years, you can accumulate ₹ 5,61,62,430, which is more than double of corpus made in 30 years.

Thus, as shown above, starting early, investing regularly for a long period of time, will make fortunes for you, due to compounding of your returns. And follow below steps:

  1. Set your financial goals.
  2. Start investing early.
  3. Start even with a small amount.
  4. Save as much as possible.
  5. Reduce your lifestyle expenses.
  6. Select best investment options and gradually, invest in different but best asset classes to diversify.
  7. Target each investment accordingly to your financial goals.
  8. Invest regularly and automate your investments.
  9. Stay invested for long period of time.
  10. Do not withdraw money before targeted period, to allow power of compounding.


The key financial success is to learn the path to financial know how because it is your hard-earned money. If in doubt, take help from a registered financial planner. Select best investment option according to your risk profile and return expectations.

Importantly, identify your financial priorities and set your financial goals through, ascertaining your monthly expenditure, increasing your savings, investing early in your life and select asset class with best returns for all your long-term goals.

Automate your monthly investments for effortless savings and be patient with short term volatility in the assets returns, such as, mutual funds, gold, bonds and others and stay invested for the big corpus of funds in the long run.   

Above content is made for knowledge purposes and not a direct advice to anyone. Do consult with our financial advisor.

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