7 Tips for Redefining Your Short-Term & Long-Term Financial Goals
Prioritise with age
Prioritise objectives based on your age and their growing importance to your financial security. For example, repaying debts, renovating your home and building a retirement corpus are some milestones you should consider prioritising as you age.
Balance risk and safety
Some goals may require you to invest in high-return potential asset classes like equity, while others will push your portfolio towards more conservative debt instruments. Ensure your goals lead to a well-balanced portfolio with the right mix of asset classes which are aligned with your risk profile. Different asset classes have different levels of risk associated with their returns potential and a financial advisor will be best placed to guide you on the same.
Align your short-term objectives to your long-term goals
It’s easy to lose focus of your long-term financial objectives. One way to ensure you stay on track is to break down your big long-term goals into multiple short-term milestones. This ensures that your smaller goals ultimately help you build up to your larger financial goals.
Consider the tax implications
When redefining your financial goals, keep in mind the tax implications. For instance, if one of your goals is buying a home, also include the stamp duty charges and other taxes when assigning a total value to the goal.
Adjust for inflation
While calculating the financial value of your goals, don't forget to adjust for inflation. Assess the impact of inflation based on your time horizon and the current value of your goal. Online calculators can help you determine the inflation-adjusted value of your goal.
Redefine your buckets
Things may have changed since the last time you listed your goals. Some of your long-term goals could now be mid-term or short-term goals, or you might have already achieved some. Re-allocate goals into short-term, mid-term, and long-term buckets as per the time horizon remaining.
Build an emergency fund
An emergency fund protects the entire financial plan if something unexpected occurs. You can consider starting a monthly SIP in a preferred mutual fund to build a corpus without putting a strain on your finances.
It's vital to revisit your goals frequently to ensure you stay on track for a stable financial future. Remember, a goal without proper financial planning is just a wish. Redefine your goals and build a robust strategy to help you achieve them.
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