With almost two months into 2024, this is a good time to evaluate your current financial situation and set some achievable lumpsum investment goals for the rest of the year. While it's good to have aspirations, setting unrealistic goals can lead to disappointment and demotivation when they are not met. This article discusses how investors can set smart, achievable lumpsum investment goals for 2024.

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Start with your current financial situation

Before fixing any lumpsum investment targets, start by assessing your current financial standing. Take stock of your existing assets, savings, expenses and debts. This will give you a clear picture of how much surplus cash you can realistically allocate for investments in 2024. Look at your monthly savings from salary or business over the last 6-12 months. If you are saving Rs. 20,000-30,000 per month consistently, allocating Rs. 3-5 lakhs for lumpsum investments in 2024 is achievable. However, if your savings are only Rs 5,000-10,000 per month, aiming for Rs. 1-2 lakhs for lumpsum investments would be more realistic.

Fix achievable targets based on your surplus

Once you know your surplus funds after meeting regular expenses and debt obligations, fix appropriate lumpsum investment targets for 2024. It's always better to have targets that can be comfortably achieved rather than gambles.

For example, if your surplus is Rs. 1 lakh after all expense calculations, aiming for Rs 50,000-80,000 lumpsum investments in mutual funds or other vehicles would be sensible. Stretching it to Rs 1 lakh may not leave you with enough emergency funds.

Similarly, if your surplus is Rs 3-5 lakhs, lumpsum investments of Rs 2-4 lakhs for 2024 would fit your financial ability. Break your annual lumpsum goal into quarterly targets to stay on track.

Prioritize long term mutual funds 

Lump sum mutual funds offer many options for Indians. Equity/stocks are best suited for long term goals 5-10 years away like children's education, marriage, retirement etc due to potential higher returns over time.

Prioritize tax-saving ELSS funds and large cap equity mutual funds for lumpsum investments with a minimum investment horizon of 5 years to make the most of market ups and downs. Mid and small cap funds can also be considered for a small high-risk portion if the investment time is 7-10 years.

Balance risk and returns appropriately

While higher returns are tempting, balance them well with the associated risks for your goals and risk tolerance. Large cap equity mutual funds aim to deliver inflation-beating returns of 12 per cent plus annually over the long term with relatively lower risk compared to mid and small cap funds.

For those uncomfortable with high volatility, diversify lumpsums across large cap, multi cap and balanced advantage funds. The latter aims to provide inflation-beating returns through dynamic equity exposure based on market conditions. This helps achieve a balance of protecting capital and participating in equity upside.

Assess your past performance

Evaluate how well you achieved your lumpsum investment targets in the past 1-2 years. If shortfalls were due to unrealistic aims or unexpected emergencies that drained savings, adjust goals accordingly.

For example, if you could invest only Rs 30,000 against a target of Rs 50,000 in 2022 due to a necessary home repair, aim closer to Rs 30,000-40,000 for 2024 to avoid stress over uncontrollable factors. Regularly reviewing goals keeps you financially disciplined.

Conclusion

With disciplined planning and prudent goal setting, you can achieve sizeable long term wealth creation through annual lumpsum investments. Focus on staying invested for the long haul in the stock market by prioritizing equity mutual funds to make the most of compounding returns. Review targets regularly and rebalance wisely to optimise outcomes over the decades.

 

 

(This article is part of IndiaDotCom Pvt Ltd’s Consumer Connect Initiative, a paid publication programme. IDPL claims no editorial involvement and assumes no responsibility, liability or claims for any errors or omissions in the content of the article. The IDPL Editorial team is not responsible for this content.)