"our plans miscarry because they have no aim. When a man does not know what harbor he's making for, no wind is the right wind."
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Purpose drives us as human beings. Having goals provides direction to our efforts and turns our dreams into something we can actually work towards. Purpose is the strongest motivator. It builds discipline, especially during moments of uncertainty and crisis.
When it comes to our financial dreams, goal tagging becomes the first and most crucial step. It helps convert abstract desires to clear, doable outcomes. Even so, the financial landscape is vast and often becomes overwhelming. Goals are spread across multiple priorities. Market fluctuations, rising expenses, and limited disposable income can make them feel distant or even unattainable. But trust me when I tell you, they’re not. All you need is balancing.
Before we understand how to balance different types of goals, let’s understand what are short-term vs long-term financial goals.
Short-term Goals:
Imagine your current financial problems as a cluster of knots. While some knots represent unmet needs for survival and security, others represent wants and desires missing a structured plan to fulfill them. Short-term goals refer to immediate priorities that require accessible and secure savings. It works towards untangling the initial small knots from this cluster.
Some examples of short term financial goals are:
- Building an emergency fund.
- Planning for home renovation.
- Purchasing or repairing a device.
- Travelling.
For these goals, investments that prioritize safety and liquidity work best. Short-term investments are known for low-risk and quick access to funds as and when they’re needed.
Long-term goals:
Long-term goals lay the groundwork for bigger, future problems. They are complicated and more difficult to untangle. Aiming to build security and accessibility in the long run, these goals require disciplined planning, execution, and the willingness to fight market fluctuations for greater returns.
Some examples of long-term goals are:
- Wealth creation
- Retirement Planning
- Child’s education/ marriage
- Future healthcare corpus
- New home/ vacation property
Funds that can cater to a longer duration and fight market fluctuations despite being high-risk are usually the best fit for long-term investments. Some examples of these are, equity, mutual funds, large-cap index funds, flexi multi-cap and hybrid funds.
However, making these decisions on a whim can be risky and could work against your goals. Balancing these funds is highly important. Which is where we’ll talk about asset allocation.
Balancing financial goals with asset allocation:
Asset allocation refers to distribution of assets among multiple categories in your portfolio. It aims to create a balance that can stand stiff against all the storms the market throws at you, minimizing the damage. Explained in the same analogy, asset allocation is balancing the tension across the entire cluster. Some knots need tighter pulling while the others can come off quicker.
This process balances growth, stability, and liquidity so that the progress on one goal does not come at the cost of another.
In addition, strategies like 60:30:10 equity debt and gold mix and maximizing employer benefits can come to your rescue.
The role of an RIA:
Despite understanding the groundwork of balancing short-term and long-term goals, working without professional guidance is not the wisest decision an investor can make. A registered investment advisor can properly assess your goals and provide you with strategies that specifically work towards achieving your goals. With structured plans, smart investment strategies, step by step guidance, achieving any financial goal can be made possible.
If you are wondering where to find affordable registered investment advisers; let me tell you, they are now just a click away! For more information, contact us at:
support@fydaa.com
“All who have accomplished great things have had a great aim, have fixed their gaze on a goal which was high, one which sometimes seemed impossible.”
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