How to achieve your financial goals in next 10 years

Capitalstars Investment Advisor

Whether you want to save for retirement or prepay a home loan, you can achieve that within 10 years. It's all about how you make your plan.

The 10-year challenge, capturing the change in one’s physical appearance from what it was a decade ago to now, has become a social media craze. While participating in such challenges can make you feel good for some time, there is little beyond that. On the other hand, if you set yourself a financial challenge, it might not garner any likes or comments as it is private in nature, it could make a qualitative difference to your future.

That is what Mumbai-based finance professional Sandeep Singhal, 29 has done. The millennial set himself the challenge of prepaying his Rs 40-lakh home loan, which has a balance tenure of 18 years, within the next 10 years. Instead of paying the prescribed equated monthly installment (EMI) of Rs 37,500, he has decided to direct Rs 70,000 towards this purpose. The probable result? He will successfully ace the challenge if he sticks to his plan over the next six years.

Given his earlier track record of saving for five years in a disciplined manner to arrange for the Rs 19 lakh down-payment for his home in 2016, he is confident of achieving his goal. He attributes his success in acing challenges to strict discipline. “I avoided buying assets that are depreciating in nature. I have seen friends who do not manage money well and end up buying expensive mobiles, clothes, cars or bikes that give immediate gratification, but are of no use after a point of time,” he explains.

The heady, challenging twenties

Singhal’s financial discipline is an example for young individuals in the early stages of their career. They can use the financial independence they have earned to meet important goals, instead of splurging the bulk of the income on frequently replacing mobile phones or other gadgets. “Generally, the millennial generation starts saving very late. They don’t give a thought to savings in the initial years—a big mistake that can come back to haunt them later,” says Puneet Oberoi, Founder, 

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Build a strong foundation in your thirties

Thirties is when you start getting a taste of the responsibilities, with marriage, kids and house purchase, among other things, playing out over the decade. It is time to focus on your family —your dependents—at this stage. Multiple responsibilities will necessitate thinking ahead and meticulous financial planning to achieve all goals. Take the case of NCR resident Gopal Sharma.

The Forties is the time to multi-task

Like the thirties, the initial years of this life-stage, too, entail juggling several roles. However, it is also the stage when individuals are settled in life, with a clear roadmap to achieve their goals. “In their 40s to 50s, people start to settle into their lifestyle and know they need to start planning for retirement seriously. Usually, it is too late to change one’s lifestyle at this stage. So money needs to be accommodated to the chosen lifestyle,” says Jain.

Countdown to retirement

Now is the time to play safe – adventurism can damage the nest egg you have nurtured over the years. The challenge now is to keep your corpus safe over the next 10 years. “Move your investments into fixed income instruments. Pay off any pending debt including home loans or any major debt and buy a second home if you haven’t earlier to earn rental income,” says Sudheer.

Look for safe instruments like the senior citizens’ savings scheme (SCSS) or the Pradhan Mantri Vaya Vandana Yojana (PMVVY) managed by LIC. It is also time to plan your life postretirement— focus on the non-monetary aspects, too, and figure out how you wish to spend your time during that phase. Make a list of hobbies you wish to pursue to skills you want to acquire. “Many people do not invest in estate planning at all. They should make a will and plan their inheritance planning well at stage,” says Oberoi.