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BQ Big Decisions: Can’t Tell Which Way Markets Will Go? Try Goal-Based Investing     

With markets near all-time highs, it’s a good idea to depend on goal-based investing in 2021 for peace of mind. 

(Source: BloombergQuint)
(Source: BloombergQuint)

India’s equity markets haven’t behaved the way most predicted it would. When they crashed in March 2020 with the onset of the coronavirus pandemic, most expected that the recovery would take a while. Instead, in less than a year, benchmarks have breached pre-pandemic levels and are trading at all-time highs.

Some argue that this near-one-way climb in equities has to stop soon. But, according to Amol Joshi, founder of PlanRupee Investment Services, investors shouldn’t try to gauge when this will happen. Instead, the focus should remain on building a portfolio to meet financial goals.

A goal-based approach to investing requires an individual to list down their financial goals, and make investments in assets that are most likely or best placed to help them achieve those goals. Investments in equity are usually best suited for long-term goals like retirement, while debt investments are more appropriate for short- and medium-term goals like a vacation fund.

Such an approach makes investing less difficult, and investors can face short-term volatility in markets with equanimity, according to Joshi. On this edition of BQ Big Decisions, Joshi discusses goal-based investing in the current context.

Listen to the full conversation here: