Goal Planning is an attempt to align one’s Financial Goals (Personal & Family Goals), with the investments that one makes, to ensure that they are able to realize the goals when the time’s ripe. Here are a few examples of common life-goals that I can think of: Children’s Education, Marriage, Retirement, House, Car, Family Holidays, etc. Some of these Goals like Buying a Car or Going on a Family Vacation are negotiable and hence flexible in nature, whereas others such as Retirement, Children’s Education, Marriage etc. are non-negotiable and thus less flexible. However, because of the high emotional value associated with non-negotiable goals, these happen to be very close to our hearts. In-fact it is these non-negotiable Life-Goals that lend meaning to our existence; and it is for this very reason that Goal Planning assumes real significance.

Although the idea of Goal Planning may sound very appealing to the mind, in practice, this is something most individuals and families fail to implement. In the absence of a goal based investment plan, most individuals and families simply choose to go with a random, unstructured approach to investing i.e. identifying a few efficient instruments and deploying all their life-savings into them. However, when investments are not linked to specific non-negotiable life-goals, there is a strong tendency among individuals and families to dip into their investments from time to time, either to meet their short term entertainment and leisure needs or to fund unforeseen financial crises. When such withdrawals take place frequently, they eat into their savings & investments, thereby jeopardizing their Goals.

On the contrary, when investments are linked to a specific life-goals, the propensity to break them for purposes other than the ones planned, goes down drastically. For instance, If I’m investing for my daughter’s higher education, a goal very close to my heart, I would neither break the investment, nor would I make unplanned withdrawals from the investment pool under any circumstances. Same is the case with every other significant life-goal such as Retirement, Marriage, etc. Thus, our commitment to life’s important goals, helps us develop a deep sense of investment discipline; one of the key attributes for achieving long term investment success. Disciplined Investing over a long term period also helps us reap the rewards of compounding and ultimately leads us to Financial Well-Being.