We all have different goals in life. Sometimes they present themselves immediately, sometimes over a period of time. For example, when one starts working, they may not have too much on their mind except regular monthly expenses and some impulsive buys. But eventually, goals arise—a bike or car, weekend get-aways, international trips, marriage, so on and so forth.Well, there’s a solution that can help us plan for all our financial goals and also be prepared for the newer goals that may arise as we progress through life:&nbsp;Systematic Investment Plan (SIP) You can invest a small amount every month through SIP. Not just that, you can also start goal-based investments; this means starting an SIP for each goal. This way, you can use the power of compounding in <a style="background-color:transparent;border-bottom-width:0px;box-sizing:border-box;color:rgb(3, 141, 138);text-decoration:none;" href="https://www.mutualfundssahihai.com/en" title="Mutual Funds">Mutual Funds</a> for different goals like retirement, marriage, and even buying a car or a house. This is when returns earn more returns in the future—compounding the total return an investor receives. You can read more about the <a href="https://www.mutualfundssahihai.com/en/what-power-compounding">power of compounding here</a>.For example, one could start their goal-based investments as below:<table><thead><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(0, 0, 0);box-sizing:border-box;padding:0.1em 0.6em;"><th style="background-color:rgba(0, 0, 0, 0.51);border-bottom-style:none;border-color:rgb(255, 255, 255);border-image:initial;border-left-style:solid;border-right-style:solid;border-top-style:solid;border-width:1px;box-sizing:border-box;color:rgb(255, 255, 255);padding:4px 9px;text-align:left;">Target amount</th><th style="background-color:rgba(0, 0, 0, 0.51);border-bottom-style:none;border-color:rgb(255, 255, 255);border-image:initial;border-left-style:solid;border-right-style:solid;border-top-style:solid;border-width:1px;box-sizing:border-box;color:rgb(255, 255, 255);padding:4px 9px;text-align:left;">Investment duration</th><th style="background-color:rgba(0, 0, 0, 0.51);border-bottom-style:none;border-color:rgb(255, 255, 255);border-image:initial;border-left-style:solid;border-right-style:solid;border-top-style:solid;border-width:1px;box-sizing:border-box;color:rgb(255, 255, 255);padding:4px 9px;text-align:left;">MF Scheme</th><th style="background-color:rgba(0, 0, 0, 0.51);border-bottom-style:none;border-color:rgb(255, 255, 255);border-image:initial;border-left-style:solid;border-right-style:solid;border-top-style:solid;border-width:1px;box-sizing:border-box;color:rgb(255, 255, 255);padding:4px 9px;text-align:left;">Expected returns*</th><th style="background-color:rgba(0, 0, 0, 0.51);border-bottom-style:none;border-color:rgb(255, 255, 255);border-image:initial;border-left-style:solid;border-right-style:solid;border-top-style:solid;border-width:1px;box-sizing:border-box;color:rgb(255, 255, 255);padding:4px 9px;text-align:left;">Investment amount</th></tr></thead><tbody style="box-sizing:border-box;"><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(204, 204, 204);box-sizing:border-box;padding:0.1em 0.6em;"><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 1 lakh</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">2-3 years</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Debt Fund</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">6-8%</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 2,500 per month</td></tr><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(204, 204, 204);box-sizing:border-box;padding:0.1em 0.6em;"><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 4 lakh</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">5 years</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Balanced Fund</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">10%</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 5,000 per month</td></tr><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(204, 204, 204);box-sizing:border-box;padding:0.1em 0.6em;"><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 25 lakh</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">10 years</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Equity Fund</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">12%</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 10,000 per month</td></tr><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(204, 204, 204);box-sizing:border-box;padding:0.1em 0.6em;"><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 10 lakh</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">15 years</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Equity Fund</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">12%</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 2,000 per month</td></tr><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(204, 204, 204);box-sizing:border-box;padding:0.1em 0.6em;"><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 30 lakh</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">20 years</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Equity Fund</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">12%</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 3,000 per month</td></tr><tr style="background-color:rgba(0, 0, 0, 0.063);border-bottom:1px solid rgb(204, 204, 204);box-sizing:border-box;padding:0.1em 0.6em;"><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 1.5 crore</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">20 years</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Debt Fund</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">8%</td><td style="border:1px solid rgb(255, 255, 255);box-sizing:border-box;padding:4px 9px;text-align:left;">Rs 30 lakh (lumpsum)</td></tr></tbody></table><p style="-webkit-text-stroke-width:0px;background-color:rgb(244, 244, 244);box-sizing:border-box;color:rgb(53, 53, 53);font-family:&quot;Noto Serif&quot;, &quot;Noticia Text&quot;, Georgia, &quot;Times New Roman&quot;, serif;font-size:14.994px;font-style:normal;font-variant-caps:normal;font-variant-ligatures:normal;font-weight:400;letter-spacing:normal;margin:0px 0px 1.2em;orphans:2;text-align:left;text-decoration-color:initial;text-decoration-style:initial;text-decoration-thickness:initial;text-indent:0px;text-transform:none;white-space:normal;widows:2;word-spacing:0px;">*Assumed returns for the MF category Note: For illustration purposes only; actual figures may vary depending on market risk.Over the years, you can change the long-term <a style="background-color:transparent;border-bottom-width:0px;box-sizing:border-box;color:rgb(3, 141, 138);text-decoration:none;" href="https://www.mutualfundssahihai.com/en/what-systematic-investment-plan-sip">SIP investment </a>amounts for each of your goals. For example, once you have achieved your dream of buying a vehicle, you can increase the SIP amount for the other goals by Rs 2,000 each. By doing so, you can accumulate more wealth for your goals than initially anticipated.&nbsp; Post retirement, you may want to move your investments to a low-risk Fund, like those that invest in low-risk debt instruments to reduce your risk exposure. This can continue to earn returns even after retirement. In fact, these investments can also help you earn a secondary source of income by way of a Systematic Withdrawal Plan.This way, investing in different Mutual Funds for a suitable duration depending on your goals through SIPs can help you achieve all your dreams and goals in life over different time durations.*Mutual fund investments are subject to market risks read all the scheme related documents carefully.

Goal-based investing: SIP investments for each of your goals

Anyone under the age of 18 (minor) can <a href="https://www.mutualfundssahihai.com/en/how-start-investing-mutual-fund-schemes">invest in Mutual Funds</a>, with the help of parents/legal guardians until the <a href="https://www.mutualfundssahihai.com/en/what-age-should-one-start-investing">age of 18</a>. The minor must be the sole account holder represented by the parent/guardian. Joint holding is not allowed in a minor’s Mutual Fund folio. One should have an investment goal for the minor that needs to be achieved by <a href="https://www.mutualfundssahihai.com/en">investing in Mutual Funds</a> like say funding higher education.Once a child attains the age of 18 and becomes a major, the first thing you as a parent/guardian need to do is change the status of the sole account holder from Minor to Major else all transactions would be stopped in the account. The tax implications will now have to be borne by the sole account holder as applicable to any investor above the age of 18 years. Until the child is a minor, all incomes and gains from the child's portfolio is clubbed under the parent's income and the parent pays the applicable taxes. In the year the child turns major, he/she will be treated as a separate entity and will pay taxes for the number of months for which he/she is a major in that year.

Can minors invest in Mutual Funds?

Debt Funds provide lower but relatively stable returns as compared to equity funds. They provide stability to a portfolio&nbsp;as they trade in the fixed income market which is more stable in comparison to the stock market that impacts equity funds. Everyone needs a financial plan that’s designed to meet various financial goals in the future, like kid’s college education, medical expenses, house, retirement, etc. We invest our money in different assets like property, gold, stocks, <a href="https://www.mutualfundssahihai.com/en">Mutual Funds </a>to achieve different <a href="https://www.mutualfundssahihai.com/en/how-do-i-fulfill-my-financial-goals">financial goals</a> that arise at different points in our lives.<a href="https://www.mutualfundssahihai.com/en/what-are-debt-funds">Debt Funds</a> are most suited for goals that are short-term in nature, as opposed to equity funds that are suitable for long-term goals like retirement planning, given their volatile nature in the short-term. Some Debt Funds like <a href="https://www.mutualfundssahihai.com/en/What-are-liquid-funds">Liquid Mutual Funds</a> are suitable for parking your money for few months if you’ve received a bonus or sold some other investment and are deciding on what next to do with the money. Debt funds are also suitable for goals where you don’t want to take the risk of failing to fulfil it, like the college education money that you want to withdraw in 2 years’ time. You can invest your money in a <a href="https://www.mutualfundssahihai.com/en/what-are-fixed-income-mutual-funds">fixed income fund</a> for such kind of goals. Thus, debt funds should be a part of every financial plan.

Are Debt Funds suitable for my Financial Goals?

Retired people usually have their savings and investments locked up in bank FDs, <a href="https://www.mutualfundssahihai.com/en/know-differences-between-ppf-and-mutual-funds">PPFs</a>, gold, real estate, insurance, pension plans etc. Most of these options are difficult to convert to cash immediately. This may lead to undue stress in case of medical or other emergencies. <a href="https://www.mutualfundssahihai.com/en">Mutual Funds</a> provide the much-needed liquidity to retirees as they are easy to withdraw and offer better post-tax returns.Most retired people fear the volatility or fluctuation in returns of Mutual Funds and stay away from them. They should put some part of their retirement corpus in <a href="https://www.mutualfundssahihai.com/en/what-are-debt-funds">Debt Mutual Funds</a> and go for a <a href="https://www.mutualfundssahihai.com/en/what-systematic-withdrawal-plan-swp">Systematic Withdraw Plan</a> (SWP). This will help them earn a regular monthly income from such investments. <a href="https://www.mutualfundssahihai.com/en/what-are-debt-funds">Debt funds </a>are relatively safer than equity funds as they invest in bonds issued by banks, companies, government bodies and money market instruments (bank CDs, T-bills, Commercial Papers).SWP in debt funds provides tax efficient returns as compared to bank FDs. Income from FDs/pension plans are taxed at higher effective rates compared to withdrawals under SWP. You can easily stop a SWP or change the withdrawal amount anytime depending on your need unlike in a pension plan. Thus, retirees should include Mutual Funds in their financial plans.

Goal Planning