Returns cannot be your Goals

Last Updated on April 24, 2026 by teamtfl

In a seminar I was running for a group of young investors, I kept repeating one thing: define your financial goals before you pick any investment.

After the third time, a young man in the front row stood up. “Hemant, my goal is 30% returns per annum. Can you help me achieve that?”

The room laughed. I did not. Because that question comes up in every seminar, every client meeting, every WhatsApp group about investing. And it reveals a fundamental confusion about what investing is for.

Why 30% returns is not a goal – it is a fantasy

Let me tell that young man something I should have said in the room.

Warren Buffett, the most successful investor in recorded history, has compounded at 24.7% per annum over 50+ years. If you had invested Rs.1 lakh with him 50 years ago, you would have Rs.621 crore today. That is what 24.7% compounded looks like.

At 30%, that Rs.1 lakh would have become closer to Rs.5,000 crore.

Buffett could not do it. The entire mutual fund industry in India cannot consistently do it. No SEBI-registered advisor can promise it. Anyone offering 30% guaranteed returns is either deluded or about to disappear with your money.

But here is the deeper point: even if 30% were achievable, it is still not a goal. It is a speed. And speed without a destination is just recklessness.

Returns are a by-product, not the objective

Think about how you keep money in a savings bank account. The return is 3 to 3.5% – the lowest of any financial instrument. And yet you keep money there, often even when you could earn more elsewhere.

Why? Because that money serves a goal: your emergency fund. Immediate liquidity matters more than returns for that particular purpose. The goal determines the right instrument – not the other way around.

This is how every investment decision should work. Start with the goal. Then choose the instrument that best serves that goal at the required level of return, risk, and time horizon.

The problem most Indians have is they start with the instrument. “I heard FDs are safe.” “My colleague doubled money in crypto.” “My uncle says gold never loses value.” Each of these may be partially true. But none of them starts with your goal. And investment without a goal is saving without purpose.

What defining a goal actually means

A goal has four components – not just a number.

1. The purpose: What is this money for? Child’s education, retirement income, home purchase, medical corpus, family vacation. Be specific.

2. The present cost: What does it cost today? If your child’s college fees are Rs.15 lakh at today’s rates, that is your starting point.

3. The inflation factor: How much will it cost when you need it? Education inflation in India runs at 10 to 12%. Rs.15 lakh today becomes roughly Rs.50 lakh in 12 years. That is the number you are actually saving for.

4. The required return: Given the time horizon, how much do you need to invest periodically to reach that amount? This calculation gives you the return you need – not the return you want. Often it is 10 to 12%, which equity has historically delivered in India over any 15-year period. Not 30%.

The dangerous behaviour of chasing returns

A DALBAR study on US equity markets found that average equity returns from 1991 to 2010 were 9.14% per annum. But what investors actually received was just 3.27%. The gap between what markets delivered and what investors kept was almost entirely due to one behaviour: chasing returns.

Investors bought when the market was high (exciting, everyone talking about it). They sold when it fell (panicking). They moved from fund to fund looking for whoever performed best last year. Each move cost them something – taxes, exit loads, timing losses.

The investor who simply bought a diversified equity index and held it for 20 years, without checking performance rankings, without switching, without chasing the next big thing – that investor kept the full 9.14%.

Goal-based investing protects you from this behaviour. When you know your child’s college fees need this corpus in exactly 11 years, you do not sell in a panic when the market drops 20%. You know the math. You stay invested. The goal becomes an anchor.

The investor without a goal is like a driver without a destination

You need speed to travel. But speed is not the point – arriving is. You can drive at 140 km/h in the wrong direction and end up further from home than when you started.

“An investor without investment objectives is like a traveller without a destination.”

At times, the best driving strategy is a mix of speed and caution. On highways, fast. Through school zones, slow. Similarly, a well-constructed portfolio uses equity for long-term goals where volatility is acceptable, and debt for short-term needs where capital protection matters more.

Keep your asset allocation tied to your goals, and you will not only reach your destination – you will get there with significantly less anxiety along the way.

Also read: How to Align Your Investments with Life Goals: The 5-Step Framework

Frequently asked questions

What is the financial goal you are currently investing for – and do you know exactly how much you need and when? Share it in the comments.