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Not all holidays can be spontaneous and unplanned. Sure, you can always pull off a long weekend in Goa at the last minute. However, when you’re ticking off your dream vacation to Europe or Australia, you’ll need to plan in advance.
Your budget is the first thing you need to think about when starting to plan. No matter how badly you want to take your dream vacation, it might not be wise to fund it through debts. A good holiday is something that should not leave you financially scarred once you’re back. Therefore, it is sensible to plan a budget and dedicate a fund solely towards it.
So, how should you start planning to fund your dream vacation?
A savings account is merely a means to store your money in a safe place. You can park your money into your savings account and let it accumulate over the years. The money in your savings account will earn a nominal interest each year too. Such a savings account could be a good idea if you’re gathering funds for a rainy day in the future. However, when it comes to your vacation budget, you need something that’s more than just a safe house for your money. You need an instrument that will grow your money too, such as investments.
Activate Systematic Investment Plan (SIP) insteadIf you’re looking to take a dream vacation in the next one to three years, you can activate a Systematic Investment Plan (SIP) to start building a fund as a short term investment. SIPs help you invest in mutual funds in a systematic and automated manner. In a SIP, a fixed amount is debited from your bank account each month and invested in one or more mutual funds. Since this could be a small amount, it doesn’t affect your monthly finances. Depending on the monetary value of your goal, you can pick a tenure and class of assets to help you achieve it. SIP's benefit significantly from the power of compounding. It could generate more returns than a savings account.
Look for short term-mutual funds to invest inDebt mutual funds could be a good idea when looking for low duration funds. With debt mutual funds, your investments are converted into debt and money market instruments where the maturity of the security is between 6 to 12 months. Even with a low-average maturity period, these are investment with large returns delivering a higher corpus, than a savings account or a fixed deposit. Such short-term debt funds are suited if you’re planning a budget to travel in the next one to three years.
Multiply your surplus funds through liquid mutual fund
If you get a bonus or a large amount of money, don’t let it stay idle for your vacation. You can put your surplus funds in a liquid mutual fund. These are short-term investments that earn low-risk returns. They also have an easy entry and exit route so you can withdraw the funds whenever you want without worrying about the exit load.
Make your dream vacation a reality by building your funds through the right investments. You can find multiple options of mutual funds investments and stocks on www.reliancesmartmoney.com
