Costing a goal honestly
The most common planning error is to save towards today's price for something you will buy years from now. A car costing twelve lakh today is not a twelve lakh goal if you intend to buy it in six years.
Enter what it costs now and the rate at which that cost is rising. Different goals inflate at very different rates — education and medical costs have historically outpaced general inflation by a wide margin.
Matching the instrument to the date
- Under three years — the money should be somewhere it cannot fall. The return matters less than certainty.
- Three to seven years — a mix, weighted towards debt as the date approaches.
- Beyond seven years — equity has historically been the more reliable way to stay ahead of inflation, provided you can leave it alone.
As a goal draws near, moving the accumulated amount progressively into safer instruments protects what you have built from a badly timed fall.