What is financial planning? How do we do it at Goalwise?

The basic objective behind investing money is to let it grow till you need to use it at some point in the future.

It could be used for handling an emergency expense, going on a vacation (Bali anyone?), buying a house (that elusive cottage in the hills!), or for generating post-retirement income (the much coveted idea of financial freedom).

Each such purpose then can be planned as a separate financial goal.


A goal has 4 attributes, namely:

  • Objective of the investment - Why are you investing? eg retirement
  • Duration or time horizon of the goal - When do you want to achieve this goal? eg in 20 years
  • Target - What is the target amount you have in mind for this goal? eg 5 Crores
  • Risk profile - How much risk are you willing and able to take? eg Low/Moderate/High

Based on these inputs, one can determine which investment products to use (Mutual Funds, FD etc), the investment amount needed, and the asset allocation (now as well as how it should change over time) in order to achieve that goal.

These inputs and outputs together form a goal plan.

Planning for individual goals in this manner is fairly simple (though not trivial!), and is a basic form of financial planning called goal-specific planning (something which you can easily do through your Goalwise dashboard).


Oh, is that all there is to financial planning?

Over the last 2 years, while seeking goal planning advice, many of our investors have asked us the following - Is there more to it? Is there a way to come up with a more complete picture, that takes into account all these individual goals together? Maybe also factor in my monthly income and expenses? My pre-existing and ongoing investments and loans? And my insurance cover as well?

Yes, there absolutely is more to it! You are thinking on the right track! These are the elements that go into the preparation of a comprehensive financial plan.

Comprehensive Financial Planning

So far, we have done such comprehensive financial planning for more than 200 Goalwisers. The entire process can be broken down into the following 3 steps:

Step 1. Collecting the required data

Before we can make a comprehensive financial plan, we need to obtain a detailed picture of the current assets (investments, real estate etc), liabilities (loans) and cash flows (income/expenses), and your future goals.

Details of current insurance coverage (life/health/accident cover) and the age profile of any dependents are also needed in order to make a complete financial plan.

Usually we collect this data by sending a financial planning input sheet over email. The more accurate the data here, the better and more relevant the financial plan will be.

Step 2. Goal feasibility and planning

In the second step, we match your assets, liabilities and savings to your goals and assess their feasibility.

If all the goals are feasible, we can determine how to allocate the current assets and savings towards each goal and make a goal plan for each.

But more often than not, we find that the current investments and savings of investors are not enough to fulfill all their future goals.

In these cases, we help investors redefine their goals to make them more achievable (reduce the target, or increase the time horizon, or both), and also help in prioritizing them (via-a-vis the expenses). You can do without a foreign trip every year if your retirement income is on the line. You can’t just say YOLO when you’re approaching 60.

Financial planning is not just about investments. Based on the existing insurance cover and details of dependents, we also figure out whether existing insurance cover is sufficient, or some additional cover will be required.

There are usually some iterations at this step before the plan gets finalized.

Step 3. Implementation and monitoring

Once the investor and advisor agree on the plan and it is finalized, it can then be implemented.

The goal-based investment part can be easily implemented on Goalwise and Goalwise's inbuilt goal-tracking and rebalancing etc allows for easy monitoring and maintenance.

Other non-investment related aspects like insurance, loan etc can be handled separately and are tracked by the advisor as part of the comprehensive financial plan.

Finally, a financial plan is never static. As new life events occur, e.g. birth of a child, change of job etc or as our priorities change, the plan needs to be updated accordingly.

Do I even need financial planning? Why can't I just invest to maximise returns?

After all, if my returns are maximized then I will be in the best position to fulfill all my goals, right?

There are two reasons why the 'just maximize returns' approach does not work:

  • Without making a financial plan you will never know if you are saving enough. May be there are some small adjustments that you can make today that will help you live a more financially secure life tomorrow. As they say - failing to plan is planning to fail.
  • The other reason is behavioural - if you are just chasing returns, you will end up taking higher risk than you should and at some point when the markets go down, you will lose more than you have the stomach for and bail out (usually at the worst time). So, in a very Zen-like way, the more you chase returns, the harder they will be to come by.


Financial planning can help you give an overall structure to your investments, as well as keep track of your assets, liabilities, financial goals and ultimately, provide peace of mind.

If done early, small adjustments may be enough to put all your goals within reach. In other cases, major changes might be in order.

Want us to make a comprehensive financial plan for you?

Just get in touch with us via email on care@goalwise.com. :)