Goal based investment (GBI) differs from traditional investment by measuring the success of investments in meeting an individuals personal or life goals. Here, the aim of the investor is not to get maximum return on investment but to measure progress towards specific life goals such as planning ones retirement or saving for childrens education.
Less savings and huge returns - For an average person its extremely difficult to save a huge amount of money but its possible for him by saving lesser amount of money every month for a particular time period.
Saving Purpose - A person would be far more satisfied if he knows the purpose of his saving. For instance, a person would be satisfied knowing that he has saved 5 lakh rupees but he would be even more delighted knowing that he has saved that amount specifically for his childs education.
Advanced Planning - Emergencies always come unannounced thats why one must always be prepared for it. While making goals its necessary to invest some money in an emergency fund which would be used during financial crisis.
Flexibility - Goal based investments are flexible in nature. The investor can make short term plans to achieve immediate goals such as a foreign vacation or long-term plans such as starting a new business, retirement, etc.
Unplanned Spending - Its human nature to often spend money without planning. For instance, if you see a limited-edition watch of your favourite brand costing 8 thousand rupees then you tend to buy it without thinking about the savings. Having some specific savings will ensure you that you have a little backup of your own.