Returns cannot be your Goals

In a seminar, where I was talking to a group of young investors, I repeatedly told them to have Financial Goals before they start investing. Annoyed by my repetition, one young guy stood and said, my goal is to achieve 30% returns per annum. Can you help me to achieve that?

Now let me clarify his statement to all of you.

• The world’s richest and the most successful investor of all times “Warren Buffet” could not achieve 30% return consistently over his 50 years of investing.
• His rate of return on investment is mere 24.7% p.a.
• If you would have invested Rs.1 lac with Warren Buffet 50 years before, you would be worth more than Rs. 621 crore today. This is just equal to what was his compounding rate of 24.7%.
• But if your rate of return would have been 30%, your 1 lac would have become closer to Rs.5000 Crore.

For god sake, I can’t give that much return to people, if someone can achieve that, please contact me, I shall give all what I have. For sure, I will give Rs. 1 lac.

What this young guy said was not new to me and most of the investors think that they are investing because they need to earn high returns. In fact, I thought the young guy had at least an idea of how much return he wanted to earn, most people we talk just land up asking for HIGHER return. There is no definition of HIGHER RETURN that they have. ReadHigh Return Investment in India

Investing just for earning return cannot be anyone’s target or AIM. Having more money cannot make you happy, but fulfilling your dreams can make you happy. All of us have certain dreams in our life and those dreams need to be fulfilled to lead a happy life. In the hindsight, we all land up investing for our goals only, it is the long term goals for which we don’t plan or for that matter we are not clear.

Let me explain you in other words.

• We all have savings account and we keep money there. Even though we may not really need the money, but still we are comfortable to keep the money there even at the lowest return.
• The reason we have our money there is one of our financial goal, that is EMERGENCY. So even if we are getting high returns elsewhere, we prefer to meet our goal than to earn high return.

I am not trying to say that we should not be hunting for returns. But returns are by product of investing, the main aim is to achieve our Financial Goals. Typically people go wrong in Financial Planning when it comes to their Long Term Goals. Achieving long term goals involves careful study of few factors.

• What is the present cost of that goal
• What will be inflation factor over the years
• What product mix we have to take so that the goal can be comfortably met
• What should be the periodic investment towards that goal
• What should be the PLAN B in case of any mis-happening

Just aiming at returns will not lead to goals. If I ask you, my aim is to drive fast, would you agree. Or if I say, I want to take the train that has highest speed. It sounds odd. You definitely need speed when it comes to traveling but speed cannot be your goal. Your goal is the destination that you want to reach.

“An investor without investment objectives is like a traveller without a destination.”

Also at times, driving should be a mix of speed and caution, we should strive for balance and not just speed. Similarly, we always advocate for a Balanced Portfolio which will help you in achieving your Finanical Goals.

Keep your asset allocation intact and you will then not only achieve your goals but also have desired speed as well.

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Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.


  1. Rightly said….

    In fact in few forums i have visited i receive queries like accumulating Rs 8-10 lakh in 6 years, becoming a crorepati in 10 years.All these queries are raised without understanding personal life goals.Much to do with euphoria on “Becoming a crorepati” created by most personal finance advisors.

    • Every Financial “expert” worth his name on TV or in the Pink Papers does exactly what you have mentioned, Invest 10,000 a month in 4-5 schemes and become a crorepati in 10-12-15 years. Can anybody guarantee that? Without knowing in detail the person, his occupation, income, outgo, dependents, expenses etc, in a two minute question on a TV program,
      a quick fix for everyone?
      Its like saying take a Crocin for any type of pain.
      Everybody nowadays is chasing returns. Even Warren buffet got his annualized 24% return because of his conviction in his investments, here we have EXPERTS going through your portfolio every quarter and half year telling you to switch from this scheme to that or from this fund to that or surrender this policy and buy this one?

  2. Hi Hemant
    Most important thing is-
    Keep your asset allocation intact and you will then not only achieve your goals but also have desired speed as well.
    It is good that you have given it in red letters. Hopefully it will catch the eye of those who do not believe in reading the entire post.
    I think you have written on this topic earlier also. There is no harm in repeating as the importance of goals needs to be highlighted again and again.

    • Hi Anil,
      “Hopefully” is the perfect word after fate of your SIP article. Purpose was that people should learn but it turned to something else. 🙂

  3. Very interesting article…I am not surprised by the query of young -to achieve high returns that too fast. “Jawani mein khoon garam hota hi hai” This can be compared to driving by the young guys. Most of them drive’s only through experience, age(especially after having kids) that one realizes the need to balance speed with safety.
    We live in a jet age and we all want to have the short cut to get more money.
    Sadly though we don’t allow people to drive without license test we allow them to enter complex financial world without much financial training. Few of them don’t even balance their cheque book or track their expenses 🙂 and fall into credit card debt.
    What is required is to set the realistic expectations. The figures you mentioned..about Warren Buffet are eye-opener.
    One needs to have the foundation right which includes having a fair asset allocation, understanding risk-reward etc. Your blog helps in getting the basics right!

    • Hi Kirti,
      Rightly said “Sadly though we don’t allow people to drive without license test we allow them to enter complex financial world without much financial training.”

  4. Thanks Hemant ji for reminding us again the value to follow ones goal,
    I feel everyone is nervous during this market situation where everyone is loosing money. People are trying to look for better option then equity diversified
    and by doing so will be wrongly guided to a situation worse in a longer term of the word.
    I myself have done it once when the market crushed, I stopped all my SIP
    and sold all my shares, which I still regret still now, If only your article was there to guide us through those tough time, I guess I would have been a better person.
    Thanks and God bless for the job you are doing for us the people with no financial education.
    Keep going and waiting for your next article

  5. Hi Hemant,

    Till Time I think that investment means to gain higher returns only. Now I understand the true meaning of investment. Thanks for this great article.

    • Hi Sunil,
      Most of the people think like this only & that’s the reason I have written this article. 🙂

  6. Hi Hemant
    Nice article.
    I was in bhusawal,maharashtra few days ago and read a local newspaper named “”mutualfund marg”‘ (in marathi).I will scan and mail it to you if is really good informative newspaper for investors.Hope you and manish start similar weekly newspaper someday.
    keep writing.

    • Hi Paritosh,
      Thanks for sharing the info but I don’t understand marathi 🙁 (But still you can send the scan – I will check the format)
      It is really good to hear that someone is doing great effort in such a small place.

  7. I understand that returns is not important but achieving goals.

    one point. I’ve read your articles about LIC policies are expensive , but your blog carry advertisement of the same LIC . contradicting…..

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