This article teaches you to save and invest in a disciplined way by defining major investment goals in one's life.

And then, you see an advertisement promising a discount on that LCD TV you had been dying to buy. So, you go ahead and liquidate some of your investments to generate cash for the TV, and promise yourself to invest more to make up for this. You get the LCD TV you always wanted, but your investments suffer an out-of-turn reduction.

Sounds familiar? Replace the LCD TV with a vacation, a car or a laptop, and it could be anyone of us. Haven't most of us sold some of our investments at some point in time to buy something unplanned? That is the problem with haphazard or random investment - like many other things in life - When you don't have goals or targets, it's easy to digress.

This means that a more disciplined, planned approach to investment is needed. You should know what exactly you are saving for, so that if you decide to sell some of your assets, it is easier to find out the direct implication on that target. You can also track the investments against your targets, so that you know precisely where you stand.

This is where Goal Based Investment comes in handy. It makes the task of investment very, very easy - the only thing needed is the discipline to invest regularly. Let me explain it in detail.

Goal Based Investment means saving for specific goals. Following are the steps to be followed (Don't worry - I would explain each step in detail):

This can be best explained using an example. So let's say you are a 27 year old working woman, falling in the highest tax bracket.

Note: In the example, I have used Indian Rupees as the currency. If you are from a country other than India, just replace the currency and amounts with those relevant for you, and that would work - the basic principles of Goal Based Investing remain universally true for everyone!

Click here to download the worksheet for this example.

Step 1: Determine Goals

Although there would be many financially significant events for which you would like to save, for this example, let's say you decide you have only two goals.

Step 2: Determine Current Cost

How much do these goals cost today?

In the area where you intend to purchase your 2 bedroom apartment, it costs around Rs. 30,00,000 today.

The car you are planning to buy costs around Rs. 5,00,000 today.

Step 3: Determine time frame

Now is the time to decide when you want to achieve these goals.

You decide that you would like to stay in your own apartment when you are 50. This means that you have 23 years to achieve that goal.

You would like to buy the car in about 4 years from now.

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Note: Please treat the opinion expressed here as a broad suggestion. Please consult your financial planner / investment advisor before making any investment decision.