Goal-Based Investing: A Worked Example for an Indian Family

Goal-based investing means every rupee you invest has a job: a goal with a name, a date and a target amount. Instead of asking "which fund is best?", you ask "what is this money for, and when?" and let the answer decide how much to invest, where, and how the mix changes as the date approaches. The idea is simple; the numbers are where it becomes useful. Here is a complete worked example. The family is invented, the arithmetic is real, and every return used is an assumption, not a forecast.

The family

A couple in Pune, both 34, with a four-year-old. Combined take-home income of ₹1.8 lakh a month; household expenses of ₹1.1 lakh. That leaves ₹70,000 a month to work with. They have ₹2 lakh in a savings account, some EPF, and a handful of SIPs started on tips, none tied to anything.

They have four goals. Written down with dates, they look like this:

The step most people skip is this table. Until a goal has a date and a cost, it cannot have a plan.

Step 1: inflate every cost to its date

A ₹25 lakh course fee today is not ₹25 lakh in 14 years. Education costs have risen faster than general inflation, so we assume 8% a year: ₹25 lakh becomes about ₹73 lakh. The home down payment at 5% a year becomes about ₹27 lakh in six years. Monthly expenses at 6% a year become about ₹5 lakh a month by age 60, which implies a retirement corpus in the region of ₹15 crore (roughly 25 years of expenses), before counting EPF.

The emergency fund is the exception: it is needed at today's prices, so the target stays ₹6.6 lakh, and the gap is ₹4.6 lakh. The inflation calculator does this step for any goal.

Step 2: match the asset mix to the date, not to the market

The date decides how much equity a goal can carry. Money needed within three years cannot afford a bad year in equities; money needed in fourteen can.

The shift towards debt as each date approaches is the glide path; the asset allocation calculator draws it for any horizon. It is why a fall in the market two years before the home purchase does not derail the purchase: by then most of that goal's money is already out of equity.

Step 3: work out the SIP each goal needs

With a target, a date and an assumed return, the monthly SIP is arithmetic:

The first three add up to ₹70,300 a month, which is exactly the family's surplus. The retirement number is far beyond it. This is the moment goal-based investing earns its keep: the plan does not pretend. It sequences.

Step 4: sequence what does not fit

The emergency fund finishes in 18 months. From month 19, its ₹25,500 a month is redirected to retirement and stepped up 10% a year as income grows. Run forward at 12%, that builds roughly ₹9.4 crore by 60, before EPF. With EPF and the step-ups continuing, the family is within reach of the number, and the yearly review tracks the gap rather than guessing at it. Had they started the same ₹25,500 flat with no step-up, it would reach about ₹4.3 crore, which is why the step-up matters more than the starting amount. The SIP calculator shows the difference for any figures.

The old tip-based SIPs are not thrown away; they are assigned. Each existing fund is mapped to the goal whose horizon it fits, overlapping funds are consolidated, and anything with no job is redirected. Our portfolio review checklist is the same exercise for a portfolio that already exists.

Step 5: review once a year, against the goals

A goal-based plan is reviewed against dates, not against the Sensex. Each year the family checks three things per goal: is the SIP running and stepped up, is the goal on track for its target after this year's returns, and has the glide path moved enough money to debt for the goals now within three years. A market fall changes the second answer for a year; it does not change the first or the third. That is what keeps people invested through the years that build the result.

Life changes get the same treatment. A second child, a job change or a larger house re-run the table, not the whole philosophy.

What this example is not

It is not a promise of 12% or 9%; those are assumptions chosen to show the method, and real returns will be higher some years and lower in others, including negative. It is not a recommendation of any scheme. And it is not a plan for your family: your expenses, dates and comfort with risk give different numbers. Mutual fund investments are subject to market risks; read all scheme related documents carefully.

How Sanriya does this with investors

The five steps above are the method behind every plan we build: listen, map, set up, stay close, review. Sanriya Finvest Pvt. Ltd., Pune, is an AMFI-registered mutual fund distributor (ARN-193359) and APMI-registered PMS distributor (APRN01056). We help you build the goal table, run the numbers, choose the mix and handle the paperwork, then review it with you every year; we distribute Regular plans and are paid trail commission by the fund house, so there is no separate fee, and the decisions stay with you. If you already hold funds and want them mapped to goals, start with a free portfolio review.