So far I have been giving financial advice for the singular goal of early retirement. But many of you probably have multiple goals. May be you want to buy a house, save up for kids education or planning an international vacation in a couple of years. Whatever might be your goal, you need to have a financial plan. Each goal needs to have a different corpus, asset allocation and redemption plan. If you rather watch a video on the same topic, check out the YouTube video at the end of the post.

If you want to do financial planning for your goals, the first step is to come up with a list of goals. For example, a list could be something like

1. Kids college fees
2. International vacation
3. Retirement

Next, write down the number of years in which the goal is to be realized. Following the example above, it could be something like

1. Kids college fees -- 10 years
2. International vacation -- 5 years
3. Retirement -- 20 years

## How much do you need?

Then figure out how much corpus you will need for each goal. The easiest way to find the number is to use time value of money. Write down how much it would cost today. What is the inflation of the goal today and into the foreseeable future. Here you may have to make an informed guess. For example if the cost of college fees has been increasing at 10% for the last three years, then you can reasonably assume that is how it will be in the future. Now, get a calculator and calculate the future cost of the goal using the formula

Future cost = Present cost x (1 + inflation)years to goal

When you do that for all the goals, you end up with the required corpus for each goal. Continuing with our example example

1. Kids college fees -- 10 years away, need Rs. 10L, inflation @ 10% = Rs. 26L
2. International vacation -- 5 years away, need Rs. 5L, inflation @ 3% = Rs. 6L
3. Retirement -- 20 years away, need Rs. 1.5Cr, inflation @ 7% = Rs. 5.8 Cr

## Asset allocation strategy

Finally figure out how flexible the goals are. Some goals have a hard deadline, while some others don't. For example, college fees has a hard deadline and you need to build the corpus by that time. While a vacation can be delayed if you are unable to build the corpus. Some goals may need a minimum corpus size, for example retirement. Because you cannot retire without building sufficient corpus where as you can go for a smaller vacation if the corpus is small. Based on this information you can choose an asset allocation and redemption plan.

If your goal is far away, like more than 10 years and has a flexible deadline then go for an aggressive asset allocation like 70% equity. For example, retirement is one such goal. If your goal is near and not flexible, go for a more conservative allocation like 30% equity. This probably applies for your vacation. If your goal is far but not flexible then start with an aggressive portfolio and go conservative as the goal approaches. If the goal is near and flexible, you can choose some middling strategy like 50:50 allocation.

## How much to invest?

Now you can use EMI calculation (use PMT in excel) to figure out how much to invest per month to arrive at that corpus. For each goal, plug in the numbers into the calculator and find how much to invest. Then you can invest that much every month into different portfolios to save up for each of your goals.

That's it! When the time arrives, you have the corpus ready to meet the goals. If you thought all of this is too much work, then you certainly need a financial planner. Invest in a good planner.