How to Set SMART Financial Goals: A Complete Guide for Indians (2026)

By
Hemant Beniwal
-
68
How to Setting SMART Financial Goals - Complete Guide?

Last Updated on April 23, 2026 by Hemant Beniwal

I once asked a room full of senior executives a simple question: “Can you tell me, in one sentence, what your financial goal is for the next ten years?”

The room went quiet. A few people said “retirement.” One said “financial freedom.” One said “to be secure.”

These are not goals. They are feelings. And you cannot build a financial plan around a feeling.

The inability to articulate a specific SMART financial goal is the single most common reason financial plans fail before they even begin. Not bad investments. Not bad markets. Just the absence of a clear destination.

Quick Answer

A SMART financial goal is Specific, Measurable, Achievable, Relevant, and Time-bound. “I want to be financially free” is not a goal. “I want to retire at 60 with a corpus of Rs. 4 crore in today’s money, sustaining Rs. 1.5 lakh per month for 25 years” is a SMART goal. This post shows you how to build goals that actually work, with Indian examples and a framework you can apply today.

How to Set SMART Financial Goals in India

Table of Contents

What Are Financial Goals?

A financial goal is a specific outcome you want to achieve with your money, by a specific date, requiring a specific amount. It connects your current financial behavior to a future life you want to live.

Most people confuse financial goals with financial values. “I want to be comfortable in retirement” is a value. “I want Rs. 3 crore corpus by age 60 to fund a retirement of Rs. 1.2 lakh per month for 25 years” is a goal.

The distinction matters because values cannot be planned for. Goals can. You can calculate what Rs. 3 crore requires in monthly SIP contributions today, given a reasonable expected return and your current age. You cannot calculate what “comfortable” requires.

Financial goals also have a hierarchy. Some are non-negotiable like emergency fund and insurance. Some are important like children’s education and retirement. Some are aspirational like early retirement or a second home. Knowing which category each goal falls into prevents you from sacrificing a non-negotiable for a dream.

The SMART Framework Applied to Money

Specific. “I want to save for my daughter’s education” is not specific. “I want to fund a 4-year engineering degree at a tier-1 private college for my daughter who turns 18 in 2031” is specific. Specificity determines which instruments to use, how much risk to take, and whether the goal is achievable.

Measurable. Attach a number. A 4-year engineering degree at a tier-1 private college in India costs approximately Rs. 15 to 20 lakh today. With 8% education inflation over 5 years, that becomes Rs. 25 to 35 lakh. Now you have a target. With a target, you can work backward to a monthly SIP requirement.

Achievable. Can you actually reach this goal given your income, expenses, and existing commitments? A goal that requires saving 60% of income while servicing a home loan is not achievable without significant changes. Better to know that now than after five years of inadequate progress.

Relevant. Does this goal actually matter to you and your family? A vacation home in Goa might be a genuine dream. Or it might be a social comparison goal that does not truly improve your life. Relevant goals survive the honest question: “Is this what I truly want, or what I think I should want?”

Time-bound. Every goal needs a deadline. The deadline determines which instruments are appropriate. A goal 20 years away gives equity compounding time to work. A goal 3 years away requires capital preservation. Without a timeline, every goal competes equally for your money, which means none gets funded adequately.

“A goal without a number is a wish. A goal without a deadline is a dream. A goal with both is a plan. Only the last one can be funded.”

Short, Medium, and Long-Term Financial Goals

Financial goals fall into three time horizons, each requiring a different investment approach.

Short-term goals under 3 years include building an emergency fund, prepaying a personal loan, or funding a vacation. These need capital safety. Equity is inappropriate here. Liquid funds, short-duration debt funds, or recurring deposits are the right instruments.

Medium-term goals from 3 to 7 years include a home down payment, children’s school fees, or a sabbatical fund. A mix of debt and moderate equity exposure works here, with the equity proportion reducing as the deadline approaches.

Long-term goals beyond 7 years include retirement and children’s higher education. Equity is the primary engine. Time is what makes equity risks acceptable. A 30% correction in year 1 of a 20-year investment is an opportunity. The same correction in year 18 is a problem.

Something Worth Noticing

The most common mistake in client portfolios is mixing time horizons. Long-term retirement money sitting in FDs because “markets are risky.” Short-term goals funded by equity funds because “they give better returns.” The instrument must match the timeline. Mismatching is not conservative investing. It is a category error that quietly costs real money over decades.

Indian Financial Goal Examples with Numbers

Emergency Fund. Goal: Rs. 4.8 lakh in a liquid fund by December 2026 (6 months of Rs. 80,000 monthly expenses). Monthly saving required: Rs. 40,000 over 12 months. Non-negotiable before starting any other goal.

Child’s Higher Education. Goal: Fund a 4-year professional degree for a child turning 18 in 2031. Cost today: Rs. 25 lakh. At 8% education inflation over 5 years: approximately Rs. 37 lakh required. A SIP of Rs. 40,000 per month in a diversified equity fund at 12% assumed return reaches this target.

Retirement. Goal: Retire at 60 (current age 45) with corpus to fund Rs. 1.5 lakh per month for 25 years, inflation-adjusted. Required corpus at retirement: approximately Rs. 4.5 to 5 crore. Monthly SIP requirement over 15 years: Rs. 70,000 to Rs. 85,000 at 12% assumed return. Existing EPF and PPF can offset a portion.

Home Purchase. Goal: Rs. 30 lakh down payment for a Rs. 1.5 crore home in 4 years. Requires saving Rs. 55,000 per month in a conservative mix given the short timeline.

To understand how these goals fit into a broader plan, read our post on the importance of financial planning in your life.

Mistakes Most People Make With Financial Goals

Too many goals simultaneously. If you have 12 financial goals and limited income, none get funded adequately. Prioritize ruthlessly. Non-negotiables first, then most important, then aspirational.

Not accounting for inflation. Rs. 50 lakh today and Rs. 50 lakh in 12 years are very different amounts. Education inflation runs at 8 to 10% annually in India. Always calculate your target in future value, not today’s value.

Returns as a goal. “I want 15% returns” is not a goal. Returns are a means. Chasing returns as the end objective leads to inappropriate risk and instruments that serve the return target but not the actual life goal.

No annual review. Life changes. A goal set at 35 may be irrelevant or transformed by 40. Goals need an annual review to stay aligned with your actual life. For a practical framework, see our annual financial review checklist.

Why Smart People Set Vague Goals

There is a behavioral reason why educated, intelligent people avoid setting specific financial goals. Psychologists call it self-handicapping. If you never commit to a specific goal, you can never fail to achieve it. Vagueness is protective.

“I want financial freedom” cannot be measured against reality. “I want Rs. 4 crore by age 60 and I currently have Rs. 80 lakh” absolutely can. The second version is clarifying but also confronting. It forces you to face the gap between where you are and where you need to be.

This is precisely why goal setting requires the kind of honesty most people avoid in their financial lives. The discomfort of knowing the gap is temporary. The cost of avoiding it, and arriving at retirement underprepared, is permanent.

How to Start Today

Take a piece of paper. Write down every financial outcome that matters to you. Sort them by timeline and importance. Attach a number to each. Attach a date to each.

You will not get the numbers right on the first try. A rough specific goal is more useful than a precise vague one. Start with your best estimate, engage with it, and refine as you get more information.

Then work backward from each goal to today. What does it require in monthly savings or SIP? What instruments fit the timeline? What insurance protects the plan if something goes wrong before the goal is reached?

This backward planning from specific goals is what separates financial planning from financial wishfulness.

Need Help Turning Your Goals Into a Written Plan?

Writing down goals is step one. Translating them into a funded, time-bound investment plan is what we do at RetireWise. If you are 45 to 60 and want a plan built around your actual numbers, let us start with a conversation.

Book a Free 30-Min Call

Frequently Asked Questions

How many financial goals should I have at one time?
As many as you can fund without compromising non-negotiables. For most people, this is 3 to 5 active goals. Emergency fund, term insurance, and health insurance are prerequisites, not goals.

Should I set goals in today’s value or future value?
Always calculate your target in future value. What costs Rs. 20 lakh today will cost significantly more in 10 years due to inflation. Education inflation runs at 8 to 10% annually. Your goal amount must account for this.

Can returns be my financial goal?
No. Returns are a means, not an end. The goal is what you want the money for. Chasing returns as the goal leads to excessive risk and instruments that serve the return target but not your actual life goals.

How often should I review my financial goals?
At minimum, once a year. Also whenever a major life event occurs: job change, salary increment, birth, health diagnosis, or significant change in expenses.

What should I do if my goal seems unachievable?
Adjust either the target amount, the timeline, or the monthly savings. Sometimes what seems unachievable with current income becomes achievable with a modest SIP increase at each increment. A financial planner can help you stress-test each lever honestly.

What is the difference between a financial goal and a financial value?
“I want to be financially secure” is a value. “I want Rs. 3 crore corpus by age 60 to sustain Rs. 1.2 lakh per month for 25 years” is a goal. Values guide direction. Goals enable planning. You need both, but only goals can be funded.

Before You Go

Related reading: Importance of Financial Planning in Your Life and The 6-Step Financial Planning Process.

What is your most important financial goal right now, and have you attached a number and a date to it? Share in the comments below.

One question for you: If you wrote down your single most important financial goal today with a specific amount and a specific date, what would it say?

68 COMMENTS

  1. Hi hemant I am new to all this but learnt a lot from ur articles but got disaapointed by seeing the dates are u not adding new ones? Are u still active ? Still replying I have few queries

  4. Hi Hemanth,

    I am regularly following your suggestions, really its very helpful to me. still more Iam having some douts, please suggest me, Present my age 30 years,married & my salary is 20k, Up to last month I have invested on gold (3k per month) & RD (2k per month).From this month I have started investing in SIP (Templeton India Equity Income Fund(2k), Reliance Quant Plus Fund(G),ICICI Pru Focused BlueChip Eq Fund(G),HDFC Prudence Fund(G) each 1ooo/- Rs per month ) total 5k Iam keeping on this. can you suggest me is this right thing Im doing? please help me out.In next month I will be blessed with baby.So suggest me in every aspects that I can do?

    Thanks in Advance.
    Vijay

  6. Dear Hemant,

    Pls go thru the below investments & advise what else is lacking in my portfolio as I believe due to some wrong calculation, my portfolio seems to have too many ULIPS & one retirement solution missing.

    MY INVESTMENTS:

    ULIP Plans:

    1) Aviva (Life saver plus) : Rs. 15000/- Tenure–10 yrs (Started in 2008)
    2) Aviva (Young Scholar) : Rs 15000/- Tenure– 10 yrs (Started in 2009)
    3) Birla sun life (Platinum plus) : Rs 25000/- Tenure–10 yrs (Started in 2010)
    4) HDFC (crest) : Rs 50000/- Tenure–10 yrs (Started in 2010)
    5) HDFC (pension super) : Rs 25000/- Tenure–25 yrs (Started in 2010)

    6) LIC (Money plus) : Rs 20000/. Tenure–10 yrs (Started in 2008 & STOPPED after 3 years of locking period) WHAT SHOULD BE DONE FOR THIS POLICY??

    TERM PLAN: (AVIVA–i-LIFE): Sum assured–ONE CRORE, premium–12800/- Tenure– 32 yrs. (Started in 2011)

    TRADITIONAL Plans:

    1) LIC (Jeevan anand- 3 lakh sum assurance) : Rs 10000/- Tenure–30yrs (Started in 2004)
    2) Lic (1 lakh sum asssurance ): Rs 5500/- Tenure–20yrs (Started in 2005)
    3) Lic (1 lakh sum assurance ); Rs 4500/- Tenure–22yrs (Started in 2006)
    4) Lic (1 lakh sum assurance ); Rs 6800/- Tenure–15yrs (Started in 2006)

    5) LIC ( Jeevan Ananad-3 lakh sum assur): Rs 24000/- Premium. Tenure–17 yrs. (Started in 2007 & STOPPED the policy after 3 years of locking period). WHAT SHOULD BE DONE TO GET THE MONEY BACK???

    Pls go thru all the above & tell me how can I manage some fund from these lots to accomodate any other plan which is lacking in my portfolio??

    Thanks
    Sanjeev Sinha
    09811200000

    • Hi Sanjeev,

      The list is too long and policies are too many.You should curtail these and avoid traditiional plans which at time fails to beat even the inflation.

  7. Hi Mr Hemant . read your article , found it very informative . I too have done wrong investments. Can it b rectified? pl suggest

    • Hi Munira,

      Rectification cane be decided on the base of what is the mistakes related to? If you can elaborate more then only a proper guidance is possible.

  8. Hello

    Im a 27 yr old salaried person and so is my fiance. He is earning arnd 50k per month and im earning 25k per month. Now most probably we will be getting married this year in December and due to family oppositions we will have too do it ourselves. So after keeping in mind our future needs and expenses I thought to invest 10k in RD account and 7500 in ELSS and 1500 in Term Plan (LIC) for my bf and for myself 1500 in ELSS, 1250 in Icici ULIP (which i had bought 3 yrs ago), 5k in MF ( for investment purpose and not tax benefit) and 2250 in RD account. Now, our immidetiate future need would be marriage and obviously honeymoon 😛 and expenses thereafter. Also our short term/medium term goal is to buy house/flat. one we have our own roof, definitely my goal gonna change to buy property for investment purposse though my fiance dream is to have a farmhouse in next 15-20 years or so. Could you please let me know whther my plan for short term and medium term is effective or not and what more i can do for longterm goals. P.S. We both love travelling so vacations abroad gonna be part of our fianancial planning after we are done with INDIA. 🙂

  9. Hi Hemant,
    I am 47 yrs old salaried person. I have a few SIPs where I am investing Rs. 24,000/month. My organisation is debiting Rs. 20,000/month to my PF A/C.
    I want to make 10 crores by next 10-12 yrs. Could you please help me how to progress?
    Regards,

    • It’s a highly optimistic target. By doing simple calculation you need to invest around 35 lakhs per year for next 12 years assuming 15% returns. Even if you assume returns at 18%, which is again very optimistic, you will have to invest 29 lakhs per annum for next 12 years.

  10. Hi Amit,

    I will try to answer your query.
    Based on above your goal is a short term goal.
    Your SMART goal is let us say you want Rs. 150000 Emergency Fund after 18 months.
    You need to state what are your current Expenses per month and based on this what is your savings per month.
    Since your Goal is short term whatever you invest will be in debt instrument.
    Options are: FD’s, Recurring Deposit or Debt Fund.
    You can expect to get a return of 8%-9% per annum.

  11. Dear Hemant,
    All your posts are elucidated with information which guide the readers to understand the financial definitions. I have a very basic question to ask you. I am a PhD scholar with a monthly stipend of Rs 21000. I have zero savings till date, as I was solely involved in re-paying my education loan. Now as I am free from the above burden, the planning for my financial goal is in my mind which is to accumulate a buffer of Rs 150,000 to 200,000. This is the amount which I may need after one and half year, if in case, my research work is stretched for a period of 6-8 months time without the payment of scholarship.

    I would require your suggestion to plan my savings through various suitable channels. I must mention that the scholarship is paid only as a lump sum after every 3-5 months (irregularly) which is a big constraint against the planning. I hope you would surely help me out.

  12. Dear Hemant,

    One request for you.
    Can you send the writable copy of the pdf file “Financial Goals Worksheet”.
    Now a days people keep portfolio and other information on online account.
    so if you can make this pdf writable we can fill this pdf and keep it in our online account.

    Please let me know

  13. Hi Hemant,
    Can you please Suggest top performing FMP in india( for period of more than 1-3 yrs ), just like you have a made a list of top performing equity linked mutual funds and ELSS.
    Regards
    Dr.Chavadi

    • Hi
      There can not be any such list as FMPs are close ended products & yields are unknown. Returns depended on when you have invested rather than which AMC you have chosen.

  15. Hi Hemant,

    Thanks for the nice article. But I have a quick clarification from my Side.

    I was just planning to also have chits as part of my portfolio.

    Say I invest 82 K an year and half and I get 96 K at end of 20 Months. I find the returns here are guaranteed and a safe ones and comparatively good for Mutual funds. Kindly help me on this.

    • Hi Sachin,
      Who told that chits are safe – I don’t think one should consider them for some serious investment.

        • Hi Sachin,
          Its almost unorganized kind of thing & everything depends on the credibility of organizer. In past there are several instances where organiser did some fraud in chit funds.

  16. Dear Hemant

    What an Article!!! whew…
    Thank you for doing the most difficult thing in financial planning.
    Helping others understand “What should be the financial goals of a person and how to set them?”

    I have downloaded the sheet Hemant, but I find my mind is cluttered as too many things are running around at the same time.

    My monthly salary is 30000

    As of now I have taken following steps:
    1) Term Insurance: 55 lacs sum assured with additional 50 lacs accidental death(i-protect from IPRU); Annual Premium : 9000
    2) FD of 60000 for 1yr
    3) FD of 60000 for 5 yr( tax saving)
    4) Recurring Deposit of 5000/month for 2 yrs

    I am 28, only child of my parents and about to be married this year, staying in a rented place in Mumbai away from my parents as of now.
    My fiance is also working with salary of 8000/month which might increase a bit in near future.

    I want to know as to how do I start my financial planning and what steps do I take to achieve the same?

    Your inputs will be a huge help.

    Thanks and Regards
    Swapnil

    • Hi Swapnil
      Retirement is the most important goal and you must start saving as much as you can at the earliest to benefit from the power of compounding.You can put around 70% of your savings in diversified equity mutual funds.

  17. Deatr Hemant
    Earlier I was never able to save anything for me or for my future due to my overloaded responsibilities and liabilities.
    But now i wish to save something and keep it as floating money(5-6 lakhs) first. For my family, I would get term insurance plans (2-3 ) of sum assured 50 lakhs.
    Also, wish to have something saved for my children and their studies (if you think, this is right). My Company accountant has told me that I will have high tax liability this time, so will wish to save maximum of it. Also I need to plan sfor my post retirement period.

    I know that I am late by atleast 10 years in my career but surely wish to overcome the late lapses as fast as possible. In terms of MF, SIP, ULIP etc I don’t have any clear idea about the type /company. At this stage, I am in no condition to take high risks but anything moderate which gives me good return with high safety probability, will do. I have started a RD account for 30000/- , 6 month term.
    I also wish to have a second hand car(as it is a depriciating property) and then a house.
    Please help me walk this unknown turf. Anything you suggest, will be the best invaluable thing for me.
    Thanks very much.

    Best Regards
    John

    • Hi John
      You have not mentioned anything regarding your age as well as your current savings.Retirement is the most important goal.Better late than never.To start with invest via SIP route in two balanced funds like HDFC Balanced and BSL 95.Later on you can add some diversified equity mutual funds to your portfolio. ULIP is a very costly product.Don’t invest in it.

  18. Dear Hemant

    I m very impressed by your asessments and evaluations. Hope you can surely clear my confusions and help me get on the right track.

    I am 40 yrs old, a salaried professional with a large joint family to loook after. Until october last year, though I was in 4-5 lacs bracket, I literally struggled with any type of savings. But now i have got a good opurtunity and now I am in a annual salary range of 10 lakhs approx.
    I have four children eldest being 13 yrs(twins) and the youngest at 8 yrs(twins). I would like to request your help in planning my insurances and others for tax saving . After going through different articles on the net I am surely more confused than having any clarity over things.
    All in all I understand with clarity that I should buy 2-3 term plans (not assurance or enowment plans) from different companies for life insurance. Mutual Fund, equity, debt, SIP, etc are very confusing. Please help with your suggestions.

    Thanks and Best regards
    John

    • Hi John
      The types of investments you do depends on your savings,objectives, time frame and risk appetite.In the absence of this information it is difficult to say anything.

  19. Hi Hemant
    I have gone through the case study of financial planning which appeared in the media recently. My first observation is that we suffer from gender bias even in financial planning. It has been mentioned that we must make adequate provisions for girl’s education as she can not be expected to take education loan whereas in the case of a boy education loan can be considered. Why do we suffer from this type of mindset?
    How do we arrive at the figure of expenses for education?Do we consider engineering or medical education?What about education in India Vs abroad? How do we know the type of education the kid is going to have?
    Regarding expenses on marriage also it is very difficult to predict.Moreover, there is a tendency on the part of working girls to delay their marriages. How do we account for so many variables?
    I feel we can make only a very rough estimate for these goals and to have really SMART goals is not an easy task.

      • Hi Hemant
        Yes, I got it.
        Then you become gender biased. What?? But you said “There has been a paradigm shift in the thought process of people and generally they don’t make any difference between son and daughter.” Still there are some societal concerns which many people don’t want to overlook. For e.g. spending heavily on a daughter’s marriage. You may compromise on the son’s marriage but for the daughter’s marriage no parent wants to cut corners.
        What you have said is correct but things seem to change a bit now.I am sharing my experience here.
        Recently I attended two marriage functions. In one I was a guest from the boy’s side and in the other from the girl’s side.In both cases I learnt that the parents had equally shared the expenses.
        My one brother in law has a daughter.She took a bank loan for her engineering education.With in a few years of getting a job she saved enough money to pay back her loan as well as to fund her higher education.

      • Hi Hemant
        After reading your comments about the financial planning case studies we see in newspapers and personal finance magazines I am really surprised to know that these are build on limited information with no interaction with people. How can we have a meaningful case study like this?A case study just to fill the pages of the paper/magazine without any interaction with the client is complete farce.No wonder these so called case studies hardly leave any impact on the reader.

  20. Dear Hemant,

    Nice Article. Its like a eye openier for so many peoples. Basically your explanation was very good & trustable. Till now i am feeling that, life is nothing but Personal Life (Goals) & Professional life (Goals), but after interacting your article i came to one more important thing is there in life i.e., Financial life (Goals).

    Regards
    Sekhar

  22. Hemant,

    I have been following your articles and comments for quite a while now and they are really insightful.

    However, I am not sure how one can set a financial goal for the long term. I mean I can set a goal today, but it can change to a bigger one next year. It’s more like a moving goal post really.

    Currently, the model I am following is as follows. I am 38 years old.

    LIC policies – Coverage of 20 lakhs, premiums of 90,000 a year.
    Term insurance – Coverage of 1 crore
    SIP – 40,000 a month in Fidelity, HDFC, ICICI and IDFC
    RD – 20,000 a month
    FD’s – 20,000 a month
    PPF – 70,000 a year
    Gold bullion – 100 grams a year.
    Silver – 4 kgs a year.
    Real estate – A 30×40 property every 2 years.

    Now, even after doing all this, I am not sure what the goal is. My question to you is whether following such a plan is something that you would recommend?

    • Hi BP,
      Normally goals don’t change much in future value – but yes year on year basis current value will change. Secondly as our life & financial life is dynamic – one should revisit his goals sheet ever alternate years, there can be a possibility that your priorities may change.

    • Hi BP
      What you are doing is not something strange.Most investors do the same thing.They do investments first in all sorts of assets and then try to match their investments with their goals. Actually it should be the other way round. First you should map your goals on different time frames and then start your investments as the investments for different time frames are different. This is the most effective and efficient way and is very critical for people with limited resources. In your case what you are doing may be fine as you do not seem to have any limitatation of resources.

  26. This is a SUPERB article Hemantji. Sort of a re-visit to the book you gifted me on Financial Planning during those good ole contest days. Thanks to you then and now 🙂
    One formula I would like to share that I always wished someone could put it in their blog. This formula tells you the worth of your investment after certain years with a certain % of return every year.
    { 8 X (1 + 10% ) ^ 25 }
    Where 8 is 8 lacs of our investment
    Where 10% is the rate of interest or return per annum
    Where 25 years is the investment time frame

    The total will give you return on initial investment after 25 years assuming your average return is 10% pa.

    I believe you can use this same formula to calculate how much you would need in future assuming certain inflation (instead of interest rate) if something costs xyz in today’s money.

    This way one can set a MEASURABLE goal. This is only basic, please speak to your financial planner if you have doubts, instead of assuming something.

    If there are any error in the above information, please correct. Thanks for sharing.

    • Hi Mansoor,
      Thanks for appreciating but I am disappointed with such a poor response on this article 🙁
      People don’t want to read or learn such an important thing – they still feel putting some money here & there will be more than sufficient.
      Thanks for sharing the formula…

      • Hi Hemant
        This reminds me of what the author of the book -The Rules Of Wealth says :
        Most people are too lazy to be wealthy.They may say that they want to be wealthy, but they don’t. They are not prepared to put in the work, study, learn, put in the effort and make it a determined and concentrated focus of their life.
        Yes, they want the money but only if it comes to them by accident, by luck, by chance.

  27. Sir I want to ask one querie of my friend.he is 32 years old and invest rs15000 a month in mutual funds.he have also been investing rs70000 per year in the ppf for the past 6 yrs.two years ago,he bought hdfc young star super for his son,who is now 10 yrs old.he pay a premium of about rs20000 a year for a cover of rs4lakh and the policy matures after 10yrs.should he stop paying the premium and invest in the stock market,or should he countinue with the ulip?plz advice.

    • Hi Manish,
      I appreciate that you are trying to help your friend – but I think he should come forward & ask the question. Anyways young star us an expensive policy & prima facie I don’t find any reason to continue. He can pay 3rd year premium & surrender the policy. He should also buy a term plan & accidental policy asap.

      • Hello Hemant,
        I am a bit confused regarding the advice to “pay the 3rd year premium and surrender the policy”. By surrendering what I understand is that the policy will no longer be in force. If so why pay the 3rd year premium? What will be achieved by it? Also, after payment of 3rd year premium, the policy can I think become “paid up” in which case the policy will continue to be in force, ie, give cover, but additional premiums need not be paid and as long as there is sufficient balance (to cater for the deductions) it will continue. Wouldn’t this be a better option?
        Thanx and best regards,
        Praveen

  28. Hi Hemant
    It has been mentioned in the post that smart financial goals are achievable and attainable .No doubt this is a very valid point but I would like to add one more word to it and say that Smart Financial Goals are Achievable, Attainable and Adjustable.
    Setting Smart Financial Goals is typically not an ongoing process .One has to set the goals and begin working towards them. However, review of progress towards the goals can happen typically once a year. If the progress towards the goals is not satisfactory then some adjustment in the goals needs to be done. A goal can be pushed further back where possible. For example the time frame of buying a house can be increased from five years to seven years and goal corpus of Rs 80 lakhs for the house can be reduced to Rs 65 lakhs.
    Often investors make the mistake of setting financial goals that are too rigid. Unforeseen events can sometimes throw the goal off the course. This can destroy investor’s motivation to keep going. This is an unnecessary mistake which must we avoided.
    Goals have to be treated just as goals. One can not always achieve them 100%. Goals can be achieved early, late or right on time. One has to always keep working towards the goals. Many things can get in the way. Some things can also help. Goals are not meant to be win or lose situations. There is no need to stress about them.
    One may need to adjust goal corpus or time line depending on some unavoidable circumstances. But that is alright. All goals should be adjustable.
    Change is the basic law of life. The transition from one stage to another means frequent reexamination of financial goals and means of achieving them. The future remains unknown and unknowable. At best one can plan for financial goals on the basis of partial information and uncertain assumptions. Thus it is important to be flexible to reassess the financial goals on a periodic basis.
    There are different paths to get to the same destination .So one has to be prepared for detours and roundabouts while marching toward the goals.
    Conflicting goals are a fact of life. One must do the best one can do to resolve this difficulty by allocating the available resources in the most efficient manner possible to those goals that have the highest priority.
    Setting SMART goals helps to distinguish real wants and needs from day dreams.

    • Hi Anil,
      Adjustable is the right word & it is very close to achievable/attainable so everyone should review their plan once in a year and adjust goals if required. Prioritizing goals will help people in differentiating needs vs wants.

  30. @Hemant

    THE BEST ARTICLE in 2012. A lot to learn, apply, and share from this. Cant praise it more, but its one of the best tool which can be used, not only for FINANCIAL LIFE but also PERSONAL LIFE..

    Ps: Between you and me, i have printed the FINANCIAL GOAL WORKSHEET and taking it to a client with whom i have meeting to discuss insurance and investment – and hope to close the deal with ease through the tool 🙂

    • Thanks Dhawal.
      I am not sure it will be useful for you or not but definitely your clients will find it immense helpful 🙂

      • Hi Hemant
        I have also seen the work sheet and found it very useful.But I think investors will be able to take its advantage only if they discuss it with some financial planner.

        • Hi Anil,
          A financial planner can help a person in identifying & achieving his goals but still this article will give food for thought.
          “An investor without GOAL is like a traveler without a destination.” and we know most of the people are in this category.

          • Hi Hemant
            From the type of comments we see from investors investing in mutual funds it is clear that most are investing without a goal without any concept of time frame.
            Goals are the basis of financial planning and pillars of investment structure. Hopefully this will be the topic of your next post.

  31. Hi Hemant
    Yes, I have enjoyed this post.This is truly a very comprehensive guide. I am looking forward to add my comments which going to be perhaps as comprehensive as this post.

Leave a Reply to rohit Cancel reply

Please enter your comment!
Please enter your name here