By: Jonathan Flitt

www.kineticfolio.com, http://kineticfolio.tumblr.com/

Whatever you do in life, you must set your goal ahead of anything else. Investing without a goal in mind is driving a car without a destination. A goalless investment therefore can’t make much headway; it rather increases the risks manifold. You must set your goals beforehand for an investment tailored for you. You can also asset your risk tolerance to construct investments that behave differently under various market conditions.

What is goal-based investing?

From a commoner’s perspective goal-based investing may connote investment which is goal driven; but the million dollar question is what that goal is all about and how to set that goal. Well, before we proceed further it is customary to mention here that goal-based investing is comparatively a new concept catching up fast in the market. It is deemed as the newest weapon in the market for achieving personalized goals in life through better wealth management and mobilization of resources like money etc. in hand.

The goal-based investments are by default meant for time-based investments and event-driven investments such as child’s education, paying off debt, buying a house and corpus for retirement. The intrinsic myopia with this goal-based investment is that instead of investing in high risk high return options, it rather plays into constructing a portfolio with the right combination of risk, returns and cost, in-line with your goals.

The USP (Unique Selling Proposition) of goal-based investing:

Goal-based investing undoubtedly has some unique merits over the standard mode of investment such as the following.

• Goal-based investing is always governed by the prime criteria of securing your future and allows portfolio construction tailored for your needs.
• Goal-based investing should be customized based on the investor’s financial fitness assessment.

Financial planning and working with an Investment Professional who leverages modern technology is an excellent approach to constructing a goal-based investment plan. The TIAA –Advice survey found that nearly half of Americans struggle to find financial advice and 46% now more than ever, need a trusted place to go for financial advice”.

The 2014 Blackrock Global Investor Pulse survey found that highly effective Investors get ahead of the curve. They are close to twice as likely to feel strongly about financial planning and take steps to plan for the financial implications of recent life events.

Whichever mode of investment you like, the crux is your investment should be based on your goals and objectives!

Resources:

• https://www.tiaa-cref.org/public/pdf/TIAA-CREFAdviceSurveyExecutiveSummary2013.pdf,

• http://www.blackrock.com/investing/literature/brochure/investor-pulse-brochure-va-us.pdf