Do you know anyone who puts a measuring tape around his dreams, before he dreams? Your dream could be enormous or can even be a bizarre one because you don’t always have an explanation for your dreams. There’s this young lad from Delhi who wanted to buy an awesome igloo in the Arctic region. Now, that’s quite bizarre, isn’t it? However, please note that the bizarre nature of his dream was not the main problem. The problem was that he did not give his dream a real good thought to make it come true. He thought his dream was too far-fetched and financially non-achievable given the corpus he needs to accumulate after accounting for daily expenses, bills, and other financials. The truth of the matter is that he just didn’t have an inkling of how much his dream would cost. He simply assumed that his dream to build an igloo was unachievable and let the dream die.

The big question here is that why would someone have to ever give up his or her dreams. If not as bizarre as building an igloo, you will also have big dreams such as building your own home or buying your dream car. Moreover, you would definitely want these dreams to come true. Rest assured, there’s no problem, it is time to make that happen. It is time for you to turn your dreams into goals that you can achieve. You must remember that you can convert these dreams of yours into goals only if you attach a monetary value and a time frame to them. For instance, if you can arrive at a figure of let’s say Rs.1 crore that you need to spend to achieve you dream within 20 years.

Please note that these goals become much easier for you to achieve when you carve out a financial plan as a road map to track your goals progress. A goal-based approach to financial planning is the modern method of personal investment management in the most effective manner. These goals must be SMART – Specific, Measurable, Achievable, Realistic, Timebound. Once you have SMART goals, your financial goals can always be well-planned.

Now, let’s get back to our favourite ‘igloo’ example mentioned above. Let’s actually see whether the igloo dream of the young lad from Delhi is achievable or not. Let’s assume his annual post-tax income is around Rs.20 lakhs and he has got sound saving habits. Thus, let’s assume he has managed to save around Rs.50 lakhs already. He looked up Google and found that an igloo in the Arctic is not such an expensive investment. Let’s say it currently costs around Rs.50 lakhs. Now, if he sets a time-bound plan to buy the igloo after 5 years the price would be definitely higher at around Rs.70 lakhs. After that, let’s assume he plans to rent his igloo to a timeshare company. See, after all, his igloo dream can be totally worked out provided he follows a goal-based approach.

Let’s check if his goals are SMART. His goal is SPECIFIC because he has a specific amount of Rs.70 lakhs in mind for the asset to be purchased. Placing a monetary value to your goal is very crucial for monetary planning. His plans are MEASURABLE whether you look at in pieces of small amounts or in lump sum of Rs.75 lakhs. His goals are ACHIEVABLE because he already has Rs.50 lakhs as existing savings on hand. Thus, if he falls short of funds after 5 years, he can take a housing loan to bridge the shortfall. His goal is REALISTIC because many investors prefer investing in top-notch vacation homes then why not invest in an igloo. Moreover, by renting his igloo to a timeshare holiday company he can repay the loan installments for the loan that he would take to buy the igloo. His goal is TIME BOUND because he is clear in his mind that he wants to invest in the igloo after 5 years. Thus, he has a 5-year horizon to achieve his goals, which means he can make out a carefully carved out investment plan for the 5-year period for strong returns to achieve his goal. Therefore, the young lad’s dream to buy an igloo in the Arctic wasn’t far-fetched by any stretch of imagination. You must note that however large or bizarre your dreams are, they aren’t impossible to achieve as long as you have converted them into SMART goals. All you need to do is to stick to your financial plan and simply follow the suggested investment routine.

Therefore, what are the key learnings from the young lad’s approach of converting his dream into a goal:

  • – Goal-based investing would provide you with a clear target that you can aim for
  • – Well-defined goal that is backed by a well thought out plan you will have found the key to unlock your dreams successfully

You can stand at your window staring at the sky and dream all day or can simply get down to business and buy not one, two, three, many be many more igloos. The choice is basically yours. If you are finding it tricky to invest your funds during the gestation period that you have decided for achieving your dreams to get stronger and steady returns, take the help of a professional financial planner. They will not only help you carve out a string financial plan to achieve your goals, but will also help you maximize your income during the gestation period through prompt investment strategies.

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