Recognise your short & long goals & quantify each goal: What could be the amount required to fulfill the goal and what is the time horizon.

Understand how much risk you are able to take with your investments - keeping in mind your other financial commitments and personal circumstances. This will help you ascertain the type of instruments in which you could invest & amount to be invested

It is important to understand what are you spending your money on. What are necessary spends, i.e. ‘fixed costs’ Mortgage, insurance, utilities etc. These costs can’t be cut out.

What do you have left to spend on other items? These are more flexible spendings. Hobbies, clothes, entertainment etc. Here you might be able to cut some costs

In the frenzy of daily life we tend to forget about saving money regularly as we are focussed on our daily and monthly expenses. We tend to spend our earnings first and at the end of the month realise there is nothing left to save.

It is important to break this habit of spending first whilst only saving occasionally in case there is money left. Saving needs to become a regular habit too!

Therefore we should consider our savings as part of our expenses and dedicate each month a fixed amount of our income to savings.

Try to look at Savings as a Habit and commit to ‘Save’ a fixed amount each month. For example Rs 5000 or 5% or 10% of our salary. If we put Savings first, then we only tend to spend what is left.

Inflation eats into your savings. The value of your money decreases over time due to the fact that prices of goods increase.

Saving alone might not be enough to beat inflation.

One should consider investing with the aim of retaining the value of their hard-earned cash.

Traditionally Equity is believed to be an asset class which generates positive inflation adjusted returns over long term horizon. Also Gains from Equity Investments held more than a year are Tax Free.

Each asset class inherently has some element of risk be it debt, equity, gold or real estate.

While it is difficult to predict the short term movement of an asset class, investing over a long term helps one Benefit from the Power of Compounding as well as Combat the Short Term Volatility in the Market.

Markets tend to be volatile and unpredictable in the short term. Some people think they can time the market and buy at the right times to make most profit. However even the best and most famous investors have not been able to time the market perfectly!

Rather than timing the market, which is impossible, systematically investing helps one to benefit through the highs & lows of the market.

The returns earned by the investor who captured every bottom of the market (i.e. invested at the lowest value of Sensex in the month) are comparable to the returns earned via systematic investing on just one date.

A Systematic Investment Plan (SIP) is simple investment vehicle which can help one follow the rules of Goal based Smart Investing.

SIP ensures financial discipline as every month the pre-determined SIP installment is deducted from the investor’s account on the SIP date

SIP enables one to benefit from Rupee Cost Averaging i.e. one gets more units when price is low and one gets less units in case price is high thereby averaging the total cost of purchase over a long period of time

SIP allows one to invest small amounts periodically. The small size of the periodic (monthly/quarterly) investment does not impact the wallet or one’s spending pattern while it still allows the person to build a considerable corpus over a long period of time.

One can invest in a variety of asset classes such as Equity, Debt & Gold thus it helps one to easily mange one’s asset allocation targets.