The Paradox of Investment Goals: Achieving Milestones by Letting Go vs. Setting SMART Goals

When it comes to investing, conventional wisdom emphasizes the importance of setting clear, specific goals. This approach is often seen as the cornerstone of financial success, where defining objectives, measuring progress, and diligently working toward specific outcomes are key. However, an alternative perspective rooted in ancient wisdom suggests that the best way to reach our financial milestones might be by letting go of rigid goals altogether. This paradox, beautifully illustrated in the Bhagavad Gita, offers profound insights that can complement the modern approach of setting SMART goals.

 

Ancient Wisdom: The Bhagavad Gita’s Perspective on Detachment

In Chapter 2, Verse 47 of the Bhagavad Gita, Lord Krishna advises:

“Karmanye vadhikaraste, Ma phaleshu kadachana, Ma karma phala hetur bhur matey sangostva akarmani.”

 

This translates to:

“You have a right to perform your prescribed duties, but you are not entitled to the fruits of your actions. Never consider yourself to be the cause of the results of your activities, nor be attached to inaction.”

 

This verse introduces a powerful concept: the importance of focusing on your efforts rather than the outcomes. When applied to investing, this wisdom encourages us to emphasize disciplined practices over fixating on specific financial results.

 

The Modern Approach: Setting SMART Goals

In contrast, the modern approach to goal setting is defined by the SMART framework. SMART goals are Specific, Measurable, Achievable, Relevant, and Time-bound. This method provides a structured way to set clear and attainable objectives, ensuring that our investment efforts are focused and purposeful. This framework primarily focuses on defining the results we expect to achieve. For example:

 

• Specific: SMART goals define exact outcomes, such as generating ₹1,00,000 in passive income every month. This clarity helps investors know exactly what they are working towards.

• Measurable: The SMART framework requires metrics to track progress. For example, comparing the XIRRs (Extended Internal Rate of Return) of different investments allows investors to assess how close they are to achieving their goals.

• Achievable: Setting realistic goals ensures that investors are not setting themselves up for failure. This involves careful planning, such as determining the appropriate asset allocation to reach desired financial outcomes.

• Relevant: SMART goals align investment objectives with broader life goals. For instance, saving for a child’s education or planning for retirement ensures that investment strategies are meaningful and aligned with personal priorities.

• Time-bound: Finally, SMART goals set a deadline for achieving financial objectives, adding a sense of urgency and helping investors stay on track.

 

Integrating Both Approaches: The Best of Both Worlds

There is a contrasting difference between these methods. One encourages focusing on actions rather than results, while the other advocates being specific about outcomes and working towards actions that achieve those results. At Delego Capital, we believe in integrating the best of both worlds. The Bhagavad Gita teaches us that while we are in control of our actions, we are not the ultimate arbiters of their results. We might overestimate or underestimate expected outcomes in our calculations. Therefore, instead of focusing solely on results, we should focus on our actions. Integrating both approaches by setting SMART goals for your actions can cultivate discipline and enhance your overall investment strategy. Here’s how you can do it:

 

• Specific: Action-Oriented Goals
  Rather than only setting specific outcomes, define your actions clearly. For instance, determine your asset allocation strategy while considering risks like liquidity and market volatility. You may choose to delegate this to a professional.

• Measurable: Focus on Saving Consistently
  Set a measurable investment amount that you plan to set aside from your income over a specific period. The focus of the goal then shifts from just growing your wealth to consistently saving and investing from your earnings.

• Achievable: Realistic Expectations
  Set realistic goals based on how much you can set aside after accounting for lifestyle expenses. Ensure that your asset allocation strategy has achievable expectations, reducing the risk of disappointment.

• Relevant: Grounded in Reality
  While it’s easy to aim for high returns, focus on what’s relevant to your future goals, such as building an emergency fund or saving for education. Avoid unrealistic expectations like calculating future returns at 15%; instead, maximize how much you can save from your income.

• Time-bound: Regular Review and Adaptation
  Review your goals every six months to a year, assessing whether you can increase your savings rate or need to adjust your strategy. This keeps you on track while allowing flexibility to adapt as circumstances change.

 

Conclusion: The Paradox Resolved

The paradox of investment goals—whether to let go or to set SMART goals—can be harmonized by recognizing that both approaches have their place in a successful investment strategy. By focusing on disciplined practices, embracing the journey, and cultivating detachment, you can achieve your financial milestones with greater ease and satisfaction. At the same time, setting SMART goals provides the structure and clarity needed to stay on track and measure your progress.

In the end, the true goal of investing isn’t just about accumulating wealth; it’s about achieving financial independence, peace of mind, and the freedom to live life on your terms. By integrating ancient wisdom with modern strategies, you can create a balanced and effective approach to wealth building that serves you well in both the short and long term.

 

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