investing
Goal-Based Investing: Give Every SIP a Job
By Himanshu Kumar Gupta · · 7 min read
Ask people why they invest and most say "for the future". That is why so many SIPs are stopped at the first market fall, or redeemed for a phone upgrade. A SIP with a named goal and a date is much harder to touch.
Step 1: Name the goal, the date and today's cost
- Child's graduation in 14 years: ₹20 lakh in today's money
- Home down payment in 6 years: ₹25 lakh
- Car in 3 years: ₹8 lakh
Step 2: Add inflation
Costs rise. At 6% inflation, ₹20 lakh of education today is about ₹45 lakh in 14 years. Education often inflates faster than that, so many planners use 8–10% for it. The inflation calculator shows the future cost.
Step 3: Work out the SIP
Divide the future cost by what a SIP grows to over the time you have. The Goal SIP calculator does this in one step. If the SIP is too high, push the date, lower the target, or start smaller with a step-up SIP.
Step 4: Match the fund to the time left
| Years to goal | Where the money usually goes |
|---|---|
| Under 3 | FD, RD, liquid or short-duration debt funds |
| 3 to 7 | A mix of debt and equity, such as hybrid funds |
| Over 7 | Mostly equity, such as index funds |
Two to three years before the date, start moving money from equity to safer options so a market fall does not hit the goal.
Step 5: Order your goals
Not every goal is equal. Emergency fund and insurance come first, then high-interest debt, then long-term goals like retirement and education, and finally wants like a car upgrade.
How Finkoin helps
Finkoin's Goals page picks up the goals from your health check, shows the monthly SIP each one needs and lets you link the SIPs you have started to each goal. You can see at a glance which goals are on track and which are short. Start with the free financial health check, then open Goals.
Frequently asked questions
- What is goal-based investing?
- Investing with a named goal, a target date and a target amount for each SIP, and choosing funds based on how many years are left.
- How do I calculate the SIP needed for a goal?
- Estimate the goal's future cost with inflation, then find the monthly SIP that grows to that amount by the target date at an assumed return. A goal SIP calculator does this directly.
- Should I use one SIP for several goals?
- Separate SIPs per goal are easier to track and to switch to safer funds as each goal approaches.