Goal Based Investing – What is Goal Based Investing?

Gaurav Seth
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isVerifiedExpertAuthor is a Zfunds Verified Expert
Gaurav Seth


In life, whenever we have a goal, it gives us vision, direction, clarity, and motivation. To accomplish success, we must set goals first or it will be like riding a directionless boat. This theory also applies to our investing and financial journey. Goal-based savings and investing can breathe new life to an otherwise haphazard investment and savings plan. While doing goal-based investing diligently, you become your own expert financial planner and even do a better job if the right strategy is adopted. 

In this article, we are going to talk about goal-based investing in detail and will understand different aspects of the same. 


Goal-based investing is based on the theory that financial planning is more efficient and effective when investors work towards achieving a goal rather than running behind the returns. The first step here is to create a personalized financial goal according to the investor’s age, income, expense, savings, and risk appetite. 
Further, based on that goal and the tenure available to achieve the goal, an estimated amount is calculated while taking into account factors like inflation, expenses among others. Investors also need to calculate the amount that must be invested continuously to build the required corpus in the predetermined time frame.

The primary and main objective of this is to meet personal, family, and lifestyle goals with a long-term investment strategy. The goal may be children’s education, purchasing a horse, marriage, a foreign tour, or building a retirement corpus. 

This does not necessarily have to be a long term but it can be short term too. The vision is to give investors a realistic, well defines, and workable financial goal to ensure success. 


To achieve your goals, you must climb the ladder step by step. Here is a comprehensive step by step process to get you started with goal-based investing:

1. Identification of the financial goal:

Investors should start by identifying their financial goals and the tenure available to accomplish that goal. If they have more than one goal, divide them into separate buckets of short, medium, and long term. Then consult a financial expert at ZFunds about the requirements and approximate investment value and asset class. 

2. Calculate your appetite to save and invest:

Once you identified and quantified your goals and figures out the investment tenure, it is time to ascertain how much you can save for investment from your income. You must not forget to maintain an emergency fund with enough cash or a fixed deposit that is able to meet your expenses.

3. Opt for your ideal investment instruments:

When we speak of goal-based investments, it is not always about a long tenure. Investors have short-term goals and needs as well. For example, buying a car, home repairs, short holidays among others. 
So investors must discuss the instruments to opt for every goal with their financial planner and opt accordingly. 


1. Helps to attain portfolio diversification:

The primary vision of investing is to beat inflation and earn returns. When investors match each rupee of their investment to a goal, they are able to earn higher returns. In most cases, they will include different investment instruments to meet different goals, This allows delivery of the portfolio and thereby reducing the risks while being beneficial in wealth creation over the long term. 

2. Purpose of investments 

When investors have surplus funds, they may ask how to invest, how long to invest, and how much to invest. Goal-based investing helps to answer all these questions because they know the exact amount that is needed and when it is needed to meet the objectives allowing them to determine how much they need to invest. It is beneficial in health creation and to make sure that investors meet their objectives.

3. Disciplined Investments:

When investors know their short and long-term objectives such as retirement corpus or children’s education, they may opt to start a SIP in a mutual fund which will help to develop investment discipline by ensuring a fixed amount is invested at regular intervals to yield higher returns. 

4. Assist to opt for the right investment instruments 

Once investors have answered how they will be able to opt for the right and ideal investment products. They know their exact requirements which allows them to ascertain the life cover needed, whether investing in mutual funds is beneficial, and the amount you need to invest to attain financial freedom after retirement. They make the right decisions without adopting the herd mentality. 


Investors must note that it is very significant to have the right mindset while investing. And this is what goal-based investments help you with and assist you to accomplish your financial needs and attain financial freedom. Perseverance, consistency, and patience are indispensable and essential aspects of this phenomenon of investing. 


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