Money Goals: If you are employed or do business then the biggest question is what are you planning for your retirement? Yes, amidst rapidly increasing needs and expenses, you will have to take care of your future also. You need to pay attention from now on whether you are investing the right amount for your goals or not.
You can invest in SIP
What many people do is that they first manage their household expenses and then invest whatever is left. However, you can also do this by investing a fixed amount every month when your salary comes and spend the month with the remaining money. For example, if you have Rs 15,000 left for savings after meeting your household needs, then you can invest this money in SIP keeping in mind the goal after 15 years. But if saving Rs 18,000 is necessary according to your future plans, then you can do it by managing some expenses.
Here you can see how a shortfall of just Rs 3,000 can derail your financial targets. , At 12 percent interest rate on Rs 3000 in 15 years, about Rs 15 lakh is earned. Are you prepared for such shortage in future? If not then what should you do?
Inflation is the enemy of your goals.
The longer your goal, the more uncertain the amount will become. Inflation can affect your future goals. To deal with this, you will have to keep in mind that what things you focus on now will not affect your future needs.
For example, if your goal is to save for the educational needs of your children, then initially calculate how much money you will need in the future according to inflation. This will help you in saving the right amount. Similarly, you can plan for other needs apart from the marriage of children. Suppose, today Rs 25 lakh is spent on wedding ceremonies and events. After 21 years, assuming 5 percent inflation rate, Rs 70 lakh can be spent. According to this, at that time you will need not Rs 25 lakh but Rs 70 lakh.
If you are planning to save for retirement, first consider your monthly expenses over current costs. Assuming 5 percent inflation rate, estimate what your expenses will be after retirement. This will give you an idea of your monthly expenses after retirement. After this, guess which investment can meet your retirement needs?
How does inflation affect your goals?
When investing for a financial goal many investors consider the value of the goal at current cost. So if the cost of a child’s education today is Rs 10 lakh, parents ignore the cost after 15 years. In such a situation, suppose you start saving Rs 4,000 per month. According to this, after 15 years the cost of Rs 10 lakh will increase to around Rs 28 lakh. In such a situation, you should focus on investing Rs 6000 per month instead of Rs 4000.
It will always be better for you to calculate the high level of inflation and calculate your expenses and start investing from today itself. For the long term, invest in equity-backed products such as equity mutual funds, assuming the annual growth rate is not more than 12 per cent and inflation is 6-7 per cent per annum.
