Planning starts by making a goal specific enough to act on: what it is, when it falls due, and what it will cost in the money of that year rather than today’s.
Inflate the goal, not just the return
A cost quoted in today’s rupees understates what you will actually need. The inflation calculator on this site shows the gap, which over fifteen or twenty years is usually larger than people expect.
Horizon drives allocation
- Under 3 years - capital stability matters more than return. Volatile assets are a poor fit.
- 3 to 7 years - a mix, weighted by how much variability you can tolerate.
- Over 7 years - a higher allocation to growth assets becomes reasonable, provided you can leave it alone.
The order of operations
- 1Clear high-cost debt.
- 2Build an accessible emergency reserve.
- 3Put adequate health and life cover in place if others depend on you.
- 4Then invest towards dated goals, longest horizon first.
Review, do not tinker
An annual review against the plan is useful. Reacting to each month’s market news is not. The plan should change when your circumstances change, not when the index does.
Educational content. This article explains general concepts. It is not investment advice, does not recommend any security or scheme, and takes no account of your personal circumstances. Investments in securities are subject to market risks.