Why goal based investing is important?

Before investing, a person should always ask himself ‘What am I saving and investing for?’ Once you have identified your financial goals, ensure that they are not mere wishes. They must be SMART (Specific, Measurable, Achievable, Realistic and Time Bound). Goal based investing is important because of the following reasons:

• Caters to each person’s unique financial needs.
• Increases a person’s commitment towards his goals.
• Reduces impulsive decision making based on market fluctuations.
• Helps in achieving optimal returns by matching time horizon with the appropriate asset class.
• Helps us avoid the rat race of taking loans to fulfill needs and then spending many years in repaying the loans.

SMART goal exceprt is taken from “https://corporatefinanceinstitute.com/resources/knowledge/other/smart-goal/”

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