Financial planning can sometimes feel a bit overwhelming, and many of us struggle with figuring out the right ways to invest, especially because we weren’t taught about it in school. However, don’t lose hope yet. Some helpful and informative investment apps simplify this process and make life a little easier for us. Goal-based investment apps like Stack factor in your financial goals and assist you in reaching them in a structured manner by creating customized investment portfolios.

Life goals are important, whether it’s buying our own home or vacationing in Bali. They let us envision our future and motivate us to work towards turning our dreams into reality within a certain timeline. Goal-based investment is an effective way of factoring in your financial goals and investing wisely to attain them.

7 Reasons to Plan Goal-based Investment

Let’s delve into why you should join the goal-based investment bandwagon and how to go about it.

1. Accurately identify your financial goals while factoring in the time period.

Financial goals

Determining your various financial goals is an important step that can be undertaken using the SMART technique. SMART stands for Specific, Measurable, Achievable, Relevant, and Timely criteria. This technique involves prioritizing the necessary goals and identifying them correctly. Classifying financial goals into short-term, mid-term, and long-term goals is also helpful in formulating a structured approach.

2. Review your budget and consider it while planning.

Depending on your income and expenditure, factoring in your budget will allow you the clarity to allocate enough funds for investments. It’s a good idea to analyze previous financial statements and monthly expenditures so that you can set realistic future financial goals.

3. Ascertain your risk profile.

Assessing your appetite for risk will help you select appropriate investments based on your risk-taking ability. Your risk profile is dependent on your age, income, experience with investing, life stage, and investment objectives, to name a few.

4. Ensure that you choose the right investment products.

Since you have already identified your financial goals and figured out their timeline, it becomes easier to select the right investments that will cater to your needs. You can invest in mutual funds, ETFs, debt funds, hybrid funds, and others tailored to your specific needs.

5. Inculcate fiscal discipline.

The goal-based investment allows you to make accurate financial investment decisions aligned with your financial goals instead of investing randomly. Stack has a feature called RULES which ensures that you save and invest smartly for your future life goals.

6. Keep track of progress.

Planning financial life goals provide a clear road map, but tracking progress is also an essential part of the goal-based investment process. Tracking helps you understand which investments are working and which aren’t. You should study the market and strategize your investments so that you get favorable outcomes.

7. Diversify your portfolio.

The end goal of financial planning is to get a robust and thriving investment portfolio that will aid you in attaining your life goals. Diversifying your portfolio, which involves the allocation of assets in a prudent manner, helps mitigate the risks involved in investing in a single asset type or stock. Goal-based investment encourages you to diversify your investment portfolio to safeguard your financial interests.

Investing can become a lot easier and more fun with the goal-based investment approach. Since credible sources of data actually drive your investment decisions, it gives you an incentive to learn and invest intelligently. So let’s start investing today with Stack.