You will have different financial objectives at various stages of life. Some of these include wedding, starting a family, paying for children’s education, and building a substantial corpus for retirement.
Monetary goals are short, medium, and long-term and relate to different milestones during the future. This means you do not need the money to meet these goals immediately but it requires planning to accomplish them as and when they arise.
The primary objective of wealth creation is to accumulate a certain amount within a specific period. Although the sum may seem gigantic based on your current income, involving your family and working towards creating the corpus can be a productive activity.
Here are the five steps to determine and achieve your goals by including your family:
- Define your goal
The first and most important step is to know how much money you want to amass within a particular tenure. Ensure the amount is sufficient to take care of your future financial requirements based on your current lifestyle and increased expenses due to inflation.
- Discuss with your partner
Whether you are the only earning member or if your spouse is also contributing to the family’s finances, it is important to discuss the different types of investments that will help you reach your milestones. If you are the sole earner, accumulating the required corpus may take longer by investing for a fixed term. However, if you and your spouse are both earning, you may be able to build your corpus in a shorter period. You can invest the surplus earnings in an insurance cum investment product, which provides life coverage and wealth creation in the long run.
- Plan your goal scientifically
Simply defining the goal and discussing it with your partner is not enough. Determine the corpus you want to gather, how much investible surplus you have, and your investment horizon.
- Choose the right investment products
Various types of investments have varying returns and risks. Evaluate the options to find those products that suit your financial goals and risk appetite. For example, investing in equities can deliver higher returns, but the stock market is risky. Similarly, a fixed deposit (FD) provides lower but assured returns on investment. You can also choose a unit-linked insurance plan (ULIP), which provides life coverage along with the option to invest a part of the premium in your chosen type of fund. Here, you have the option to invest in equity, debt, or a combination of both as per your risk-taking capability. Additionally, you can switch your investment from one fund to another as per the market’s situation.
- Encourage management and contribution from your spouse
Both partners play an important role in the family’s financial security. You both are equally responsible for the family’s economic well-being. So, it is advisable that you encourage your spouse to understand more about how to invest money, manage the investment portfolio, and contribute towards building the long-term corpus. When both partners take accountability towards fulfilling monetary goals, you are able to have a higher investible surplus, which enables you to achieve your life goals faster.
Often, you may find it tedious and boring to work on your financial aspirations, understanding how to invest money, and research the returns and risk profiles of diverse investment products. However, it is important that you and your spouse are both involved in this exercise to ensure your family’s present and future financial stability.
It is also beneficial to start your investment plan early, as this allows you to take advantage of the power of compounding. Compounding enables you to earn additional returns on your profits, which helps you build a larger corpus over the long-term. Moreover, the insurance premium is lower when you are younger, as the risk is lesser. So, you are eligible to procure higher coverage at an affordable cost.