Saving enough money for your Financial Goals seem like a daunting & complex problem. But how do we tackle it…??? Saving for your Goals – be it your Retirement, Child’s Higher Education or Child’s Marriage…it depends on 3 factors – Time, Contributions & Returns.
As an Investor, you must understand the correlation between the 3 factors & how they interact!
Time plays a major role in any kind of Investment. The eighth Wonder if the World – Compounding works at its best if it is given a long period of time. You can achieve your Goal even if you start with a small amount, you don’t have to worry about the market fluctuations provided you have a longer horizon.
You as an Investor have control over this factor. It completely depends upon you how much you want to spend, save & invest! You must make it a point to increase your Investments as & when you grow in your Career. The level of Contributions you make balances the other two factors!
The Investors worry most about this factor. You may have the least control on this factor, but you must monitor your Investments. It is important for you to have a right mix of Asset Class depending upon your Risk Appetite & Goals. Make sure that your Investments beat Inflation & give you healthy returns.
Ultimately, it is about the understanding of how these 3 factors are connected to each other & work together to achieve your Goals!