Goal Based Investments - Part 3

Most people are not having such a large lump sum amount, the best way for them to make investments periodically (every month). So let’s proceed and put out how much you need to invest for each goal every year (or month).

To do this, we will be using an "annuity" concept and will be using a FV (Future Value) function of the MS. Excel. It looks like this:

Goal-oriented investment

If we have know return of rate, term investments and term (years) then FV formula gives the future value of periodic investments.

Here's a little twist - we already know the answer this formula, and that is the cost of that time to achieve the goal. So what we do not know? Term Investment, which we'll find out.

So, enter this formula in MS. Excel, and adjust the value of term investments cell such results of formula in that time the cost of achieving the goal "is of be equal. You can achieve your goal in time! For simplicity simply divide this amount by 12 and you will get a monthly amount of investments!

Number                                                1                                       2
Target                                                   Buying an Apartment         Buying a Car
Present value                                        30,00,000/-                       5,00,000/-
Years from now                                    23                                      4
The value                                             92,14,571/-                        5,68,238/-
Rate of Return                                     18%                                    6.65%
Currently required Amount                   2,04,734/-                           4,39,225/-
Amount needed per year                      37,690/-                             1,28,650/-
Amount per month required                  3,141/-                               10,721/-

Step 7: Start investments

Now that you know exactly how much money you save per month for each of your goals need, are you still waiting? Please go ahead and start investing!

You can do through monthly investments mutual fund (mutual fund) of systematic investment plan (Systematic Investment Plan - SIP). If you have more than one goal, as happens in real life, So you had 2-3 goals required monthly investment to make them a best mutual fund of systematic investment plan can invest together.

Good luck for investments!


Here was a table which is given yearly and monthly required amount of savings – if aiming to buy the house is 5, 10, 15, 20, 25 and 30 years away. Again we are assuming 5% inflation rate.

Number                                1               2               3               4               5                 6
Present value                       3000000    3000000   3000000   3000000   3000000     3000000
Years from now                    5               10            15             20              25               25
The value                             3828845    4886684  6236785   7959893    10159065  12965827
Rate of Return                     18              18            18             18              18              18
Currently required amount   1673623    933672     520872    290581       162108      90436
Amount needed per year     535188      207756    102301     54286         29653        16393
Amount per month required 44599       17313       8525         4524           2471          1366

If the goal is 30 years away, you have to save a very marginal Amount - Rs 16 393 - per year. But if the goal is 10 years away, you will have to save big bucks to Rs 207 756 per year.

As soon as you can see that you are saving the start, the effect compounding is much better - to get the same amount you have less money to invest. Inconsistent positive effects of time on your return (disproportionate positive effect) have.

Note : Your calculations will depend on two very important beliefs:
  • Rate of inflation
  • Rate of Return
Please note that the value of the two to be precise, because their value changes very little may affect the amount of investment required each month - especially for long-term goals.