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A goal-based approach to investing allows you to participate actively in the investment decision-making process.
You can take your schedule and risk tolerance for each goal into account when choosing investments because you’ve specified various goals.
Instead of judging an investment’s success by whether it outperforms benchmarks, evaluate how well its performance has been in the last few years against the aim you established for it.
To begin, you must first identify your various financial targets that you wish to achieve over different time periods. Then you must determine how much time you have, to achieve your objectives. Work out the current cost of each of these goals once you’ve established these two – aim and time period. Now double the current cost by inflation to get the future value of your target.
3 Key Takeaways 1. Goal-based investing places your financial goals at the centre of your investment plan. 2. It helps you achieve your goals through planned investing and manage your wealth. 3. You can start investing based on your risk tolerance, needs and time period of your goals. You get a clear view of your finances by mapping out all of your requirements. Goal-based financial planning can help to determine how much to invest, where to invest, and when to begin investing. Furthermore, it provides you a reason to stay invested. And it helps you in fighting your worst adversary: recklessness.
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