Having a Goal in Investment is it really required or just SAVE

General
1

Every reputed business channel keeps telling that an individual should have a goal and based on this goal that investments should be done etc.

All I have done is just save from my income, place FD and a very small portion invest in direct equities and index ETF. If someone ask me what is the goal - I have no clear answer, I need to save from my earnings, that is whay my parents did, my grandparents did and all them did fairly well in life and I inherited most of them. Did I think of saving to buy a house or a car, darn NO. When I wanted to buy a plot of land, I just took a loan and bought it knowing very well that the EMI I can pay.

So does everyone needs to have a goal to invest. Why cant someone just save and when it comes to buy something, sell and buy it - just like my parents did.

The only exception for me is I invested in NASDAQ ETF as I know INR keeps depreciating - not sure if this is a goal.

So the question is ā€œDo I need a goal for investment - can I just continue to save and Live my lifeā€ this way.

I was watching the money show and the lady was saying one year closer to the goal start taking money off investments - all correct concepts - tried in my mind to fix goals for the investment, but just could not figure out this. Is having goal a must for investments or am I doing something seriously wrong.

2

I invested and held for 15 years or so - without any ā€˜goalā€™.

In future i will invest again - only goal will be to compound capital over long term while keeping risk reasonable.

Maybe having goals is needed for people who spend most of what they make, dunno. Since i saved most of what i made, it never was an issue. So i say donā€™t worry about it if you dont have clear future expense to save for.

This is arbitary, markets could anyway tank just before you plan to withdraw - 1 year or 5 years.

But yeah, if you have a future expense coming soon and only way to fund is through money in equity - then probably you need to somehow manage risk as markets can crash anytime - but wont most of the time. i always had decent proportion in debt, say around 35%, so this was never an issue either.

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3

Exactly. So when every one around talks about goal linked investments i thought i was doing something wrong

Thanks

4

There is a huge marketing angle / vested interests of various businesses
that want individuals to mentally associate

  • the services the business offers
  • with the individualā€™s own aspirations

ā€¦so that the business get entrenched into the part of such individualā€™s life.
i.e. the business ā€œlives rent-freeā€ in the individualā€™s head for the next few decades.
In other words - a customer for life!

Ignoring the marketing genius behind this approach,
there IS atleast one good reason for an individual to have goals in mind when saving -

How do you know when to stop?

Without a goal (or two), how do you know enough is enough?
i.e. when do you stop saving and start spending / enjoying the fruits of your labor?
(then again, you donā€™t HAVE to start. Can continue as-is without lifestyle inflation.)

Also, another aspect is risk-appetite.
Having clearly identified life-goals, and clearly associated financial goals for them,
once one is close to achieving them (or after one has achieved them),
one can tweak oneā€™s risk appetite accordingly -
with higher risk opportunities usually having larger rewards.
(with lower likelihood of success).

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5

One colleague told me that its a good idea to do a recurring deposit to create a corpus for medical expenses. Her view is after certain age the premium on health insurance would be so high and this corpus would then act as a insurance amount. So when premium goes up to unaffordable level, contribute what we can afford to this fund. Also not to consider this corpus as capital when drawing ur own balance-sheet.

This could be a goal based investing I think.

6

Well, the other obvious reasons are -

  • The average person is a creature of habit.

  • Folks often do not deviate from the default option.

  • Having a clear long-term reward in mind helps one to stick to the short-term sacrifices.

These are genuine psychological effects
that the financially clueless can still benefit from
to help themselves to be better at saving/investing.

(But, these do not appear to be applicable in your case @neha1101,
as you described a healthy attitude towards saving/investing in your original post above.)

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