Smart investing: Why shifting focus from returns to goals can yield effective outcomes

Goal-based investing will always score

Walk into any conversation on investing today, and the starting point almost always will be: what’s the best fund right now? which scheme is giving the highest alpha?

The assumption is that superior past performance is the key to future wealth. But if investing success was simply about choosing the top-performing fund, wouldn’t more people have created wealth by now?

Reality is starkly different

Despite the ease of access, digital convenience, and endless data at our fingertips, most investors struggle to stay invested. According to the Securities and Exchange Board of India (Sebi), over 70 percent of new investors discontinued their SIPs (Systematic Investment Plans) within just two years. This trend is expected to accelerate in 2025, with stoppage rates reaching new highs. If we dig deeper, the issue isn’t with the market or the product. It’s behavioural.

Why the returns-first mindset fails

The obsession with performance often sets investors up with mismatched expectations. Social media has added fuel to the fire, glorifying quick gains and turning investing into a game of ‘what’s trending now’. Everyone wants the best-performing fund, but no one wants to talk about patience, process, or perseverance.

This is where investing behaviour begins to diverge from intent. Investors start with enthusiasm, but the moment markets turn volatile or returns cool off, doubts creep in. Fear replaces conviction. Many exit prematurely, not because the investment is poor, but because they never had a strong enough reason to stay.

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Goals give investing its spine

If you’re investing without clarity on why, staying the course becomes almost impossible. Goals act as anchors. They shift the focus from what the market is doing to what you are working towards: your child’s education, a secure retirement, a sabbatical, or building an emergency corpus.

Unlike a fund, your goals are personal, real, and time-bound. When you define and prioritise them, investing transforms from a series of transactions into a journey. And that journey becomes easier to stick with because it has purpose.

This is where the behavioural magic happens. Investors who are invested for their own goals tend to remain disciplined. They resist panic during down markets. They don't jump ship when another fund outperforms theirs in the short term. They understand that wealth creation is a marathon, not a sprint.

The missing piece: investing resilience

The most successful investors aren’t the ones who found the best funds; they’re the ones who stayed invested. History repeatedly shows us that time in the market beats timing the market. But staying invested isn’t a matter of knowledge, it’s a matter of behaviour. And behaviour is shaped by conviction, not returns.

Resilience in investing comes from having a roadmap. When you start with your financial situation, understand your cash flows, define your goals, and create a strategy around that, you build staying power. You don’t get spooked by every headline. You don’t chase every bull run. You stay true to your plan.

Personal finance is mostly personal

The one-size-fits-all approach is the biggest misconception in the investing world. An investment that works brilliantly for one person could be entirely unsuitable for another. Your age, income, responsibilities, aspirations, and even fears all shape how you should be investing.

That’s why the best investing journeys don’t start with product selection. They begin with introspection. What matters to you? When do you need the money? What level of risk can you handle without losing sleep? Once these are answered, the path becomes clearer. Products come last.

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The real challenge: managing information, not lack of it

In today’s world, information is no longer a premium; it’s a problem. Investors are constantly bombarded with data, opinions, charts, and “advice” from every corner of the internet. But more information doesn’t lead to better decisions. In fact, it often leads to paralysis or overreaction.

The irony is that investing has become easier to start, but harder to stick with. And sticking with it is where the real wealth lies.

The bottom line

There are no shortcuts to wealth creation. No amount of research or product- hunting can substitute the discipline to remain invested. And that discipline comes from knowing what you’re investing for.

We need to stop asking “Which fund is the best right now?” and start asking “What do I need my money to do for me and by when?” That simple shift can make all the difference.

Because ultimately, great returns are not something you chase. They’re the outcome of a robust process, powered by patience and aligned to purpose.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.