With the increase in the Robo advisory platforms, we can witness increase in the various ‘goal orientations’ of the investments. If you are goal oriented then do read these few tips to ensure that you stay firmly geared up for long term success.
You’re saving too much
Whenever it comes to some goal based financial planning, too much saving can be disadvantageous as saving can be little. If at all your monthly saving is bulky i.e. almost 50% of what you take home, then you may be stretching yourself too thing and cutting back on lifestyle expenses to the extent that you’ll quickly become disillusioned with the process. This in turn leads to erratic behavior which would not serve you well for ,ong time. For better results, you can save whatever is comfortable and then build it up gradually as you go ahead. The key factors are consistency and discipline.
You’re fixated on traditional
Your past conditioning may be preventing you from looking beyond life insurance, PPF and fixed deposit type assets that provide capital guarantees and semi-fixed, linear returns. For long term goals, this is a bad idea because you’re essentially ending up killing most of the compounding benefits that can accrue over long periods and result in explosive wealth creation opportunities. Extricate yourself from the allure of guaranteed returns and look at equities as an option, for your long term financial goals that are more than 5 years away.
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You don’t have a step-up plan in place
All right – so you started with what was comfortable on your pocket (as advised!), and now you intend to ‘increase your investments as and when its comfortable for you’. Bad news – that isn’t going to work. As the years roll by, your liabilities and financial pressures will increase simultaneously, and you’ll be up against the never-ending race to keep increasing your savings. For best results, have a very clearly defined step-up plan in place (say, in percentage terms over the past year’s outgo) and stick to it with all you’ve got!
You’re saving for everything at once
‘All I want it everything’ – does that describe you as a person? While your ambition is admirable, this attitude may end up becoming the scourge of your goal-based financial plan. When it comes to planning for your goals, remember – it’s a marathon, not a sprint! You need to plan, think ahead, prioritise and save for goals that matter the most to begin with, and then gradually add more goals as you go along. Saving for everything at once will just end up overwhelming you – and likely impacting your long-term commitment to your plan.
You’re going it alone
While there’s an element of cost-saving involved in cutting out an Advisor and going down the “DIY” path, we often find that this works out to be ‘penny wise, pound foolish’ in the long run. The support of a qualified, well-meaning Financial Advisor can prove to be critical for your goal planning success. Such an individual can hand hold you on your journey, ensure that you’re not fixated on short term market movements, and keep you aligned on your investment journey.
Follow ‘wrong’ goals.
Main reason for the failure of goals: we are setting the wrong goals. A wrong goal is often a goal that’s imposed by others, whether explicitly or implicitly. It’s something we feel we should do based on our parents’ expectations, what our friends and colleagues are doing, the societal norms that exist around us. A wrong goal is not aligned with our personal values, it’s inconsistent with our underlying beliefs, and it’s not something we fundamentally and genuinely care about.
Maybe we feel that we ‘should’ lose weight or stop smoking or exercise more. When we choose the wrong goal we’re inevitably going to be half hearted in our attempts at achieving it, which means we’re likely to fail. This has implications not just for the particular goal in question but more broadly, as we create a precedent for failure and we start to think of ourselves as ‘quitters’. It’s much harder to achieve a goal where we’ve already failed in the past.
We need to make sure that the goals we are setting are rooted in our values and will really have a meaningful impact on our lives.
Not Doing What They Know
Intelligence is knowing that tomato is a fruit but smartness is not putting it in fruit salad. But what people generally do is put those who have got aptitude in writing, art, photography etc up for engineering and medical.
Not Knowing What They Want
Most of us today don’t know why they are doing this? What they want to do? And how it can be done?
Not Associating With The Right People
Your company eventually effects your decisions and that ultimately shapes your tomorrow. Associate with wrong people and you will end up being a smoker or a drunkard… wasting all your money and energy.
Doing Things Only When You Feel Good
Procrastination is your biggest enemy. Nothing much you will be able to receive if you work only on the days you feel good.
They usually miss important habits:
- Discipline
- Focus
- Creativity
- Reading
- Sleep
- Planning
- Routines
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