Imagine standing at different milestones of your life – your child’s first day at school, the keys to your new home, flight to your dream vacation abroad, or the last day at your office before you finally retire. Each of these moments carries emotions, memories, as well a financial tag. Now imagine not knowing when you would be able to achieve these milestones. This is what happens with most of us. We invest our money but without a clear goal; often chasing the highest returns. That’s like taking a flight but not knowing where it will land.
Goal Based Investing aims to flip this mindset. It starts with where you want to be and when. Then it works backwards to decide how much to invest, and where to invest till the time your milestone arrives. Goal Based Investing is a smarter way to align your investments with your life’s priorities.
Today we understand how goal based investing can help you plan for your life’s milestones in a better way through a case study of Aarav and Neha.
Financial Journey of Aarav and Neha
When Aarav and Neha welcomed their first child into the world; their joy was unmatched. Amidst the happiness and the midnight duties, one thought kept wandering their minds, “How do we give our child the best future possible while also securing our own retirement?”
Like most young couples today, they had dreams not just for their child, but for themselves. But they also knew that dreams don’t come true without planning. That’s when they decided to explore Goal Based Investing. For them Mutual Funds offered them a one stop solution for their investments as they allow them the flexibility and the choice to select from various scheme categories. Let’s follow the story of Aarav and Neha and see how they utilised mutual funds and its features to plan for their goals.
Goal 1: Foundational Education for their Child (Investment Horizon 3-8 Years)
The priority was to build an education fund for their child’s complete education so that they can provide the best quality education without any financial strains. They adopted the National Education Policy’s Education structure to break up the various education stages for their child to plan in a better way.
For the first stage, they thought they would need to plan for ₹5 Lakhs over a period of 5 years. For an investment horizon of 3-8 years, they started an investment in Balanced Advantage Funds through SIP. To plan better, they opted for Top-Up SIP; increasing their contributions by 10% annually.
Goal 2: Preparatory Education for their Child (Investment Horizon 8-11 Years)
For the next stage, they thought they would need to plan for an outflow of ₹5 Lakhs over a period of 3 years. For an investment horizon of 8-11 Years, they started an investment in Aggressive Hybrid Funds through Top-Up SIP.
Goal 3: Middle Education for their Child (Investment Horizon 11-14 Years)
For the third stage or class 6-8, they think that they would have to spend ₹6 Lakhs over a period of 3 years. For an investment horizon of 11-14 Years, they started an investment in Equity Index Funds through Top-Up SIP.
Goal 4: Secondary Education for their Child (Investment Horizon 14-18 Years)
For the fourth stage of their child’s education which includes classes 9-12, they think they will have to plan for an outflow of about ₹10 Lakhs over a period of 4 years. For an investment horizon of 14-18 years, they will invest in a Flexi Cap Fund through Top-Up SIP.
Goal 5: Higher Education for their Child (Investment Horizon 18-22 Years)
For the higher education of their child, they anticipate that they will have to plan for significant outflows
over a period of 3-4 years depending on the stream chosen by their child. They want to plan for ₹20 Lakhs for the same for which they will invest in Mid Cap Funds through Top-Up SIP.
Goal 6: Masters Abroad for their Child (Investment Horizon 22-25 Years)
For the masters, they plan to send their child in a reputed university abroad for which they plan to spend ₹40 Lakhs over a period of 2-3 years. For achieving this goal, they plan to invest regularly in Small Cap Funds through Top-Up SIP.
Goal 7: Marriage Fund for their Child (Investment Horizon 25-28 Years)
For planning a grand wedding for their child they want to accumulate ₹30 Lakhs and for achieving this goal, they plan to invest regularly in Multi Asset Allocation through Top-Up SIP to gain exposure to Equity, Debt, and Gold.
Goal 8: Retirement Corpus for themselves (Investment Horizon 28-30 Years)
For accumulating a retirement corpus which they plan to take after their age of 58-60 years, they plan to invest across asset classes including Equity and Debt. They will start a Top Up SIP to invest regularly, they also plan to invest a portion of their yearly bonus via STP. Once their retirement nears, they will gradually shift to debt funds via STP to reduce volatility risk.
Once retired, they will use the Systematic Withdrawal Plan (SWP) option to receive a steady monthly cashflow just like pension income.
Here is a snapshot of all their goals, and the top up SIP they will make to reach the goals comfortably.
| Goal | Current Cost | Years till Goal | Future Cost | Top Up SIP Required ₹ | Chosen Category | Assumed Returns |
|---|---|---|---|---|---|---|
| Foundational Education | ₹500,000 | 3 | ₹665,500 | ₹14,000 | Balanced Advantage | 10% |
| Preparatory Education | ₹500,000 | 8 | ₹1,071,794 | ₹5,400 | Aggressive Hybrid | 10% |
| Middle Education | ₹600,000 | 11 | ₹1,711,870 | ₹4,200 | Equity Index Funds | 12% |
| Secondary Education | ₹1,000,000 | 14 | ₹3,797,498 | ₹4,800 | Flexi Cap Funds | 13% |
| Higher Education | ₹2,000,000 | 18 | ₹11,119,835 | ₹5,800 | Mid Cap Fund | 15% |
| Masters Abroad | ₹4,000,000 | 22 | ₹32,561,100 | ₹8,300 | Small Cap Fund | 15% |
| Child’s Marriage | ₹3,000,000 | 25 | ₹20,545,426 | ₹6,300 | Multi Asset Fund | 10% |
| Retirement Corpus* | – | 30 | ₹100,000,000 | ₹11,500 | Multiple | 12% |
Source: EduFund Internal Research, EduFund Online Calculator Tools
Throughout their investing journey, Aarav and Neha realised something powerful. They realised that they didn’t need to keep hunting for other investment options for their varied goals. Mutual Funds offered everything that they needed.
– SIP for long term and regular investments of savings.
– Top Up SIP for increasing their savings regularly as their income grew.
– Lump Sum for making one-time investments when they had additional savings.
– STP for gradually investing a big amount or gradually shifting from one asset to other.
– SWP for generating regular cashflows
Final Thoughts
You would have related to Aarav and Neha’s story. Because they are not a couple with unique needs. This is the story of every young couple who is dreaming big and planning smartly. With goal based investing through mutual funds, you can bring structure, clarity, and confidence to your financial life; just like they did. This way you know that every rupee that you invest, is invested for a meaningful goal.
Because when you plan with clear objectives, you don’t just chase high returns. You create a future you can look forward to.
Disclaimer: The data in this presentation are meant for general reading purpose only and are not meant to serve as a professional guide/investment advice for the readers. This presentation has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been suggested or offered based upon the information provided herein, due care has been taken to endeavor that the facts are accurate and reasonable as on date. The information placed on the presentation is for informational purposes only and does not constitute as an offer to sell or buy a security. The Company reserves the right to make modifications and alterations to the content available on the presentation. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investment. The EduFund platform & the website is owned, operated and maintained by Helena Edtech Private Limited, a company incorporated under the laws of India. An affiliate of the Company, i.e. Edubillions Tech Private Limited is registered with AMFI as mutual fund distributor bearing the registration number ARN258733. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The valuation of securities may increase or decrease depending on the factors affecting the securities market.
About the author
Niraj Satnalika
Head Of Research,EduFund
Dr. Niraj is a finance professional with 12+ years of experience and is part of the founding team at EduFund. He’s worked with Goldman Sachs, CRISIL and Sakal Media in roles spanning investment management, research and leadership. With a PhD in Finance from IIT Bombay, he brings deep expertise in valuation, governance and education planning. When he’s not teaching or writing, you’ll find him cooking or going on long drives.
