Why are financial planners urging investors to adopt goal-based investing for 2026?

As investors begin planning for 2026, financial planners urge them to adopt goal-based planning for their portfolios rather than randomly buying schemes with the short-term objective of earning high returns.

WHAT IS GOALBASED INVESTING?
Goal-based investing is a strategy where you invest your money with a clear, specific purpose in mind. For example, you may have a long-term goal like retirement, which is 15 years away, or a short term goal like buying a car in 3 years. Investing and building a corpus within the available timeframe to achieve these goals is called goal-based investing. Instead of asking, “Which is the best scheme I can invest in today?”, a goal-based approach makes an investor ask, “How much do I need for my son’s education in 2035?” or “How can I buy a car five years from now and reach that goal safely?

HOW CAN INVESTORS PLAN FOR THESE GOALS?
Financial planners believe it is important for investors to sit down and identify the goals they need to start investing for. These could include both short-term and long-term objectives such as saving for a vacation, buying a car, funding a child’s education or marriage, and planning for retirement. The first step, they suggest, is creating an emergency fund worth six months of expenses so that your goals are not derailed. Once that is in place, take each goal and estimate its current cost. Add a reasonable inflation factor to arrive at the projected cost in the year you wish to achieve it. Next, decide on the asset class yourself or consult a financial advisor to make an informed choice. Then work backwards to calculate how much you need to save—whether through SIPs, lumpsum investments, or a combination of both—to reach the goal.

HOW CAN MUTUAL FUNDS BE USED?
Mutual funds offer schemes across asset classes and time frames that investors can use to meet their goals. For example, if you plan a foreign holiday three years from now that will cost `10 lakh, you could use a combination of debt funds and hybrid funds to reach that goal. Since it is a near-term goal and the timeframe is less than five years, investment advisors typically suggest a very small equity allocation through a hybrid fund. Do your math and decide whether you prefer a lumpsum investment or a staggered approach. Also, keep tax implications in mind. Similarly, for your child’s higher education, which is more than seven years away, you could use a combination of equity mutual fund schemes