Goal Based Planning
Goals-based planning is the process of helping clients prioritize their financial goals and determine the optimal plan to fund them. Goals-based planning expands your focus into all aspects of clients financial life and eliminates the retirement-only focus.
Success of a goal based investment strategy is measured by a person’s progress towards achieving each stated financial goal. The objective here is not to be the best investor in the world. But to fulfill most of your financial goals without taking undue risks.
So in bigger scheme of things, the biggest risk for you as an investor is being in a situation where you cannot achieve your life goals. And then, beating the benchmarks might seem useless. Remember that you are more than your investments or assets. You are you. Goal based investing differs from traditional investing methodologies, where financial performance is defined as a return against an investment benchmark.
Also, instead of pooling all assets into a single portfolio, separate goal-specific investment portfolios can be created for each goal. If that sounds a little cumbersome at first, then let me tell you that its not that difficult. Its fairly intuitive and can be easily handled.