There is a strong correlation between your investments and your goals. To make life simple, every goal must have an investment attached to it. To justify its presence, the investment must qualify in two tests viz. it must mature at the time of attainment of the goal and the maturity value of the investment must be adequate to meet the goal. We have spoken a lot about the investment options that are available and how they can be customised according to your goals. Today we would talk about the latter, i.e. the basis of investments “your goals”. Most people do not invest because of lack of excitement to achieve or lack of knowledge. “Plan for your retirement” may not excite you, but “Having R5 crore at the time you retire” or “Getting R50,000 a month even after retirement” would definitely excite you. It's just a matter of choosing the right set of words. You have to make your goals simple and exciting and your financial advisor will take care of the need for knowledge. Personal finance, saving and investments are terms which might scare you off, but a little modification in your perception and presentation of these terms can make things smoother to understand and apply. As a part of the simplification process, you must make your goals exciting, as the thrill will motivate you to invest for them and work to achieve them. Following are a few key points which can help you make your goals exciting:

Pen down your goals

We do remember what is important for us, what do we want to achieve at the back of our minds, yet it is prudent to write down your goals along with the target date. Writing down your goals will remind you constantly that you have to work hard to achieve them, you can go on check marking the ones you've

accomplished. You can review the list to track your status and edit them as per your requirements. So, whatever short and long term goals you have set for yourself, just write them down irrespective of how and when you'll achieve them.

“Written goals have a way of

transforming wishes into wants;

cant's into cans; dreams into plans;

and plans into reality”

~ Michael Korda

Step by step

If you are the one who is averse to investments, try your luck with investing for one short term goal. Start with a small step - you may go for a one year debt mutual fund to actualise your dream of going for a vacation with your wife, the one which you have been postponing for dearth of money. After one year, when you get the first hand experience, you will not be hesitant but an eager investor. The contentment of achieving one goal will help you in setting and working for the next goal. The joy which you will imbibe

from this vacation will motivate you to invest for your next goal, and this motivation will set you on track.

Challenge yourself

If you feel you may not be able to conserve money from your income, to provide for your investments, “Challenge Yourself”. Your income is limited and you have a lavish lifestyle. Due to maintenance of your standard of living, you have not been able to own a house and it is your dream to have your own house. However, you feel setting a goal to buy a house is of no point since you will not be able to achieve it. It is only you who can help yourself at this point. Provoke yourself, start with a short period, say a month, develop a conviction that you will not waste money in parties, fine dines and shopping, and for this month you will limit your expenses to necessities only. After a month, when you see the extra money, you'll realize that your dream can be actualized. And at that point, the goal of buying a house occupies a place in your mission list.

Process driven

Make a list of short and long term goals. Break down your longer term goals into short term goals. Let's say you want to leave certain assets for your kids to inherit. This is a very long term goal. But before that you must provide for their education,

{s}
[[script type="text/javascript"]]
$(document).ready(function(){
new DiscussionBoard("divDiscussionBoard", "902", "http://www.njwebnest.in/esaathi/index.php/discussion").load();
});
[[/script]]
{/s}

Baghban is a captivating and a heart melting hindi movie with a mix of all the bollywood masala, emotions and songs. You all might remember crying an ocean at the melodramatic scenes, fluttering at the peppy numbers, going awww at the fairy-tale chemistry between Amitabh and Hema Malini, but might not have looked at it from a financial point of view. In this article, we will review the movie from a financial angle. Although the film was critically acclaimed for direction, story, acting, etc., it also has a very important life message for it's viewers. The movie was a perfect example of “the backlash of no retirement planning”.

In Baghban, Amitabh Bachchan has four kids and he spends all his money on the upbringing of his kids and meeting his family needs, as many Indian families do, he even takes a loan against his gratuity for his sons, expecting that his sons will take care of the old couple after retirement. Amitabh retires, and then came the series of atrocities. None of the sons is willing to take responsibility of the poor couple, they finally decide to split them, with one parent living with one son for six months and then rotating to another son. Next lies a life of dismay for the couple, and the misery is accentuated because of the grief of living separately. Finally after six months, when the date of moving them to the other son came, the couple decide to elope, thus leaving their future to fate, since they have no money.

In the movie, fate was on the couple's side, and their adopted son, Salman Khan, bumps in to take care of his mum and dad. Luck favours them a little more, Amitabh had been writing a book on his plight during those six months in his son's house, the book gets published and it is a huge success. Amitabh gets immense appreciation and huge money from the sales of the book, to take care of the rest of his life.

This film has taught us a very important lesson for life, “Plan for your Retirement”

We all want to give the best education and quality of life to our children, but in the process many parents forget about their own future. Getting our kids into the best schools and colleges or foreign universities cost a bomb. And in order to pay for the skyrocketing fee and expenses, or to sponsor our kids' extravagant weddings, we sell our investments, property, we compromise on our present and even put our future on stake.

The idea is not discouraging you from spending on your kids, and saving for your retirement only, rather keeping both, your retirement and kids' future separate. The money that you have saved for your retirement is not meant for your kids' education and the kids' education money is distinct from your retirement money. Here, you must keep in mind that most times people withdraw from their retirement corpus because they have either not planned or under planned for their kids. You need to carefully plan for both goals independently. And this should be followed religiously at all times.

Secondly, nuclear families are becoming the norm. Parents wish to retire in a serene and quiet place, in the hills or along the beach and want to spend a peaceful life, away from the hustle and bustle of cities. While the kids want to have an independent life in the cities, some even move abroad for their careers. And the kids may not be able to afford or willing to take care of two families. So, if you want to live your dream of a peaceful retirement, you need to save & plan for your future financial independence.

The bottomline is, neither are we getting any messiah 'Salman Khan', nor are we becoming a celebrity writer. Sadly real life is different from reel life. There is an interesting dialogue between Amitabh Bachchan and his boss when he wants to take a loan against his gratuity for his son, the latter advises Amitabh “Retirement ke baad apna paisa hi sabse badi taakat hota hai”. And it holds absolutely true. So, during your working life, ensure that you are investing for securing enough strength for your post-retirement years. Love your children, spend time with them, give them a good education, but do not be a traitor to your own future. Manage your finances in a way that you are able to gratify your kids' future as well as yours.

{s}
[[script type="text/javascript"]]
$(document).ready(function(){
new DiscussionBoard("divDiscussionBoard", "886", "http://www.njwebnest.in/esaathi/index.php/discussion").load();
});
[[/script]]
{/s}

Mutual funds can help investors create wealth over the long term powered with disciplined savings and patience in the right asset class.

Equity mutual funds have been able to outperform all other classes of investment over a long period of time. Let's say you had invested R 1,00,000 in a fixed deposit 15 years back at an interest rate of 8% (half yearly compounding), it would be worth R 3,24,340* today. If you had invested the same amount in a diversified equity mutual fund, it would have been worth R 22,12,423* today, i.e. almost 7 times more than what you got in the Fixed Deposit. (* % returns in diversified equity schemes is 22.93% for 15 years)

“If you want to make big money, go for a large number of smalls”

Investing in Mutual Funds has become convenient and simpler with Systematic Investment Plan (SIP) option. SIP is a tool which enables us fulfill our dreams comfortably. SIP is a disciplined approach towards investing in mutual funds. Apart from being a disciplined & convenient approach to investing, SIP enables the investor to benefit from Compounding & Averaging.

So, those investors, who started believing in mutual funds, they gave it a shot with small SIPs, they started SIPs in the last 4-5 yrs to experiment as they were doing it for the first time. But the irony is, even after their incomes have increased, the SIP amounts are still the same. Neither have the number of SIPs increased nor their contributions. Their SIPs performed well over the years and have helped them get closer to their goals while creating wealth. With an increase in income, the savings should increase, and ideally this will lead to a proportional increase in investments. It means that you can target for bigger goals, with your present income. A right increase in your SIP, can help you achieve larger goals.

Let us see what a small difference can make to your wealth. Ram started an SIP of R 5,000, 5 years back in a diversified equity fund. His investment's worth today is R 488,149*, against his investment value of R 3,00,000. Shyam stretched his savings a bit and started an SIP of R 10,000 in the same fund at the same time. The value of his investment today is R 9,76,298*, against his investment value of R 6,00,000. The pains of saving extra R 5,000 monthly by Shyam is today greatly outmatched & compensated by almost R 5 Lacs of extra wealth he managed to create over Ram. (*% SIP returns in diversified equity schemes is 19.55% for 5 years: Source NJ Research)

You must also periodically review your goals and your income. You may now want to go for an international vacation, while your previous goal was a trip to Kerala. Or, you had started an SIP for your son's education, but now you have a daughter too. So, in order to meet higher goals and invest the extra savings, you must increase your SIP's periodically. You shall start a new SIP for your daughter's education, as it is a new goal, and the maturity date would be different and you can increase the value of the SIP for your vacation.

Today you might not be able to afford a larger SIP for your retirement, because of higher expenses and other commitments . Your retirement is due 20 years hence and you may want to have a huge corpus created at that time. You shall explain your requirements to your financial advisor & he will help you find your optimum SIP value which will help you in achieving your goal. He will guide you and will suggest a smaller SIP, in case you don't want to go for a higher SIP currently, so you can make the start and as and when you move ahead in life, with higher incomes, he will help you in gradually increasing your SIP amount. You will also be meeting your other life goals with time, and the amount used in SIP's aimed at achieving these goals can also be directed towards your retirement goal.

The master plan to long term wealth creation and actualization of distant goals is 'Increase your SIP regularly'. If you do more SIP today, probably you can retire earlier and buy a bigger house than expected and go for a Europe trip rather than South Asia. At the end of the day it is your money, in case of troubles you can always redeem it or stop the SIP, till such time, it makes more sense to increase your SIP for future rather than upgrading to an I phone 7.

So, the bottomline is although your present SIPs will help you achieve your present goals. But your saving will increase with increase in your income each year and it should be invested and secondly, the quantity and quality of your goals will also change, which will require more and higher SIPs. You must contact your advisor and ask him to review your goals and help you decide the right SIP amount for you. The review should be done periodically, so that you don't lose track. Increasing your SIP is not a hectic task, but it is very important and should not be ignored. It is as easy as shopping on an App, you just have to go to the NJ App, and do the needful.

{s}
[[script type="text/javascript"]]
$(document).ready(function(){
new DiscussionBoard("divDiscussionBoard", "874", "http://www.njwebnest.in/esaathi/index.php/discussion").load();
});
[[/script]]
{/s}