Contrary to popular belief, markets are not designed for everyone to create wealth. They reward a very small minority, not because those people are smarter, but because they behave differently. Most investors lose out not due to poor products or bad markets, but because they cannot stay invested long enough for the process of wealth creation to take place.
This is where goal-based investing changes the game. Wealth creation as a goal remains abstract and cannot be classified as a ‘real goal’ as it has no finish line. It is like running a race without knowing where it ends. One keeps running, but fatigue and doubt creep in to test one’s own conviction. If you cannot visualise what your corpus is meant to do for you, you will not be able to stay committed to the process.
A goal that is specific gives direction as it creates a reason to endure and stay resilient. For example, if your investments are for your daughter’s education goal that would fall after 15 years, a short-term market correction would not bother you as you are anchored to the goal, which is far, long and is extremely meaningful. When you know what the money is meant for, staying invested becomes easier.
Markets do test patience, and volatility does create fear. This is where most investors lose money, not because markets fail but because behaviour does. Ironically, when you invest in the market with the sole objective of returns, that becomes the reason for losses. In trying to make money faster or by staying vague about goals, you tend to hinder the prospect of achieving real goals like your retirement or your child’s education in the long term.
Historically, it has been observed that investors who have stayed invested for years and often decades are the ones who have truly created wealth. Compounding does not work in months or quarters. It works quietly over long stretches of time, but staying invested that long demands discipline, conquering emotions and staying highly oriented to goals.
These outcomes are also reflected in real-world investing experiences. In a recent case, one of the investors was able to fund his daughter’s education in the US entirely through disciplined investing. What he created was not just a corpus. He created peace of mind with no last-minute loans, just clarity and confidence.
In another case, a working couple built a retirement corpus with a clear income goal in mind. Post retirement, they set up a Systematic Withdrawal Plan that generated a steady monthly income. Investments for them did not just grow, it worked for them quietly and predictably.
Another investor who used goal-based investing to close his home loan years ahead of schedule. The emotional return of being debt-free was far greater than any notional return percentage.
What ties these outcomes together is not market timing or superior returns, but consistent behaviour over long periods of time, and while the best goal-based investing process can create a plan that is highly personalised, it is the investing behaviour that can make the biggest difference in this long journey of an investor.
Behavioural Practices that Make Investing Work for You
Delayed Gratification: When money is assigned to a future goal, investors are far less likely to spend or withdraw it impulsively, be it for the latest iPhone or that large screen LED TV you have been eyeing. Delayed gratification is at the foundation of success in long-term investing. This patience gives way to compounding to create exponential wealth in the longer term.
Non-emotional Investing: Markets move in a non-linear basis; however, emotions do not need to. Investing purpose reduces panic during corrections and exuberance during rallies. Decisions are driven by process, not by movements in the NIFTY or SENSEX.
Passivity while Investing: Constant action feels productive, but often destroys returns. Goal-based portfolios benefit from staying invested, rebalancing when needed and avoiding unnecessary tinkering, as that can have a detrimental effect on compounding.
Strong Goal Orientation: Wealth by itself is abstract. When wealth is tied to a milestone, it becomes meaningful and tangible. Retirement, children’s Education or planning for your child’s wedding, can make your money work for you better.
Staying Committed amid Noise: Markets generate constant noise. Friends, social media and trends will always be an influencing factor. If an idea does not align with your goal plan, it deserves to be ignored. Commitment to your own direction matters more than chasing someone else’s excitement.
Goal-based investing is not about chasing wealth but directing your hard-earned money towards making life more meaningful and abundant.
When investors know why they are investing, they make fewer mistakes, and when investing behaviour is aligned, outcomes improve naturally. Wealth creation is still important. But wealth without purpose is incomplete. Goals give money meaning. They turn investing into a process of life change and abundance, where money is not just accumulated but directed to create security, freedom and lasting peace of mind.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.