Tailor your investments to your family’s financial goals

The beginning of a successful goal-based investment strategy is clearly defining your financial goals from the outset.

By Vivek Jain

Whether it’s handling short-term needs like building an emergency fund or planning for long-term goals such as retirement, having a focused plan ensures that each financial aspiration is systematically addressed. This thoughtful strategy not only enhances financial security but also demonstrates a father’s dedication to his family’s future. With Father’s Day approaching, let’s delve into how fathers can create and manage a goal-based investment strategy effectively.

Defining clear financial goals

The beginning of a successful goal-based investment strategy is clearly defining your financial goals from the outset. Fathers need to evaluate their family’s financial needs and categorise them into short-term and long-term objectives. Most often, it’s long-term goals, such as funding a child’s college education or planning for retirement, that demand a more strategic approach.

For these, fathers should consider investments that provide higher returns over a longer period, embracing the benefits of compounding and diversification. For example, a father aiming to save Rs 20,000 monthly for 25 years might see his Rs 60 lakh grow to Rs 3.8 crore considering an expected return of 12%, showcasing the power of disciplined investing.

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Diversifying investments for long-term goals

For substantial long-term financial goals, such as a child’s education or marriage, diversification and choosing the right investment vehicles are crucial. Unit Linked Investment Plans (Ulips) offer a dual advantage of insurance and investment. These provide flexibility by allowing switches between equity and debt funds based on market conditions and risk tolerance, aligning with the family’s evolving financial needs.

For example, investing in a ULIP can grow a child’s education fund substantially while also offering a waiver of premium optional feature in case of the policyholder’s untimely demise. This ensures the child’s education continues as planned, reflecting a father’s foresight. Similarly, annuity plans are excellent for retirement, providing a steady income stream. One can choose to invest a lump sum or make regular premium payments, securing fixed returns that offer financial stability during the golden years.

Regularly reassessing strategy

A successful investment strategy isn’t set in stone; it requires regular reassessment and adjustments to stay aligned with changing life circumstances and market conditions. Life events such as a child’s graduation, buying a new home or approaching retirement can significantly impact financial plans. This may often necessitate a reevaluation of investment strategies.

The writer is head, investments, Policybazaar.com

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