If you want to travel the world and take exotic vacations but are concerned about the financial aspect, don't worry; we're here to tell you how you can overcome that concern and look beyond it to take those dream vacations with the help of Mutual Funds.
Yes, Mutual Funds can help fulfil your dreams, and these dreams can be of any type. Be it paying out loans, education of children, or retirement planning. Systematic planning through mutual funds helps us fulfil these tasks without causing any pain.
As India's per capita income rises at a healthy rate, so do its citizens' aspirations and standards of living. However, we are influenced by western culture when it comes to discretionary spending. Our dream vacations and travels serve as excellent examples. Yes, we may have heard that mutual funds can aid in achieving a long- or medium-term objective, such as a vacation to a faraway place which is correct!
It would be best to choose the areas or the nations you wish to travel to. Next, calculate the trip's cost. Accommodation costs, travel costs, and money spent on leisure activities should all be included. Finally, prepare a list of the attractions you want to see, such as museums and monuments, and the things you want to do there.
To choose the type of Mutual Fund you want to invest your money in, you should also decide exactly when you want to plan your vacation. Choose the timing of your trip after calculating the costs. Be practical when choosing the date. It would be best if you refrained from making any hasty or arbitrary decisions to have the vacation you've always imagined. Instead, decide on a date that will allow you to save money for the trip and is realistic.
Also, include the expense of inflation in your spending plan after choosing the timing. Next, decide how long you'll be away. Your short-term objective will be to estimate the cost of the vacation based on the destination, length, and inflation.
Mutual Funds typically offer high returns if you have a long investment horizon or holding period of around 5 years, but you might not want to wait that long.
The following options are available to you if you select the option of monthly SIP investment in this situation-
Balanced Advantage Funds are funds that combine stocks, debt, and arbitrage into one portfolio. As a result, they are relatively less risky, using derivative instruments to hedge any downside risk. As a result, these Mutual Funds have comparatively lower risk and can produce annualized returns of up to 9% over three years.
Ultra-Short-Term Funds invest in debt securities with a limited maturity period, ranging between 3 and 6 months. Fund managers invest the capital into debt funds and money market instruments. These Mutual Funds are the best option if your time horizon is shorter than a year, as they produce annual returns of about 7%.
If the holding period is less than three years, then the gains you earn are termed Short-Term Capital Gains or STCG. These Mutual Funds produce annualized returns of about 8% over the chosen investment horizon, up to three years.
Planning your vacation's finances can be difficult, but if you start early, it won't be. Mutual funds are your go-to source for relieving financial tension, whether planning a local or international vacation.
A Systematic Investment Plan (SIP) that enables you to save a set amount of money regularly is an excellent place to begin. With SIP, you can encourage regular saving and take advantage of compounding by investing a fixed amount in mutual funds at weekly, monthly, or quarterly intervals. Of course, to build wealth, it is best to support for a more extended period.
To prepare for your upcoming major vacation without the associated anxiety, you should start your SIP immediately.
Though travelling the world may seem like a daunting task and we do believe that it requires a lot of money, if you plan carefully, you will be able to achieve this dream through your investments.
Additionally, keep in mind that there may be market conditions where some funds may not offer the same level of returns. In this situation, sticking with your investments is the best action.