Taking a trip to Paris with your loved one, standing under the Eiffel tower and enjoying some romantic moments together – does this sound like your dream vacation? Or do you prefer a relaxing beach holiday? Whatever your dream vacation is, we know that you’ve been harbouring this dream for quite some time now, right?
Are your finances stopping you from going on that dream vacation? Not having enough disposable income has been the commonly cited reason for not being able to live one’s dreams. What if we told you that your finances aren’t the culprit? What if we told you the problem is YOU?
Chillax! We’re not blaming you. We’re just pointing fingers at the way you manage your finances. With proper financial planning, you can actually raise enough funds to go on your dream vacation. And that too without disrupting your finances.
Check This: Travel Credit Cards
There are quite a few investment instruments and loans that you can avail to make your dream vacation a reality. While some of these options provide you with funds instantly, the others will require patience (at least a few years). An ideal wait time for raising funds for your dream vacation is three years. Keep that in mind!
Before getting to the fund-raising bit, let us look at the cost structure via this illustration.
Let’s assume you’re planning to travel to Switzerland with your spouse. Here’s an estimate:
Flight Tickets (Round Trip) For 2 in Economy Class – Rs. 1,20,000
Accommodation for 5 days – Rs. 1,00,000
Other miscellaneous expenses – Rs. 2,00,000
Visa, Travel Insurance etc – Rs. 1,00,000
According to the above breakdown, you would need at least Rs. 5,20,000 (or more) to enjoy a 5-day vacation in Switzerland with your spouse.
Additional Reading: Travel Insurance Plans for Globetrotters
Hmmm… that’s a pretty huge amount, isn’t it? But don’t worry. Here are our top three options that can help you and your spouse to raise funds for your dream vacation:
Have you ever thought about opening a Recurring Deposit account? If you haven’t, then it is time you did. So, how does an RD account work? It is a Term Deposit product which lets you deposit a certain amount of money every month (as savings). You earn interest (compounded quarterly) on the deposited amount.
How can a Recurring Deposit account help you with your vacation? Let’s assume that you have opened an RD account with a monthly instalment of Rs. 15,000. You invest for a period of 36 months (three years). The interest rate is at 7.5%. Thanks to the power of compounding, the maturity value you’ll receive at the end of the 36 months period will be Rs. 6,06,730. Wow!
Additional Reading: Differences between Fixed & Recurring Deposits
Investing in Mutual Funds may be risky, but they offer better returns compared to other investment ventures. Though it is wise to invest in Mutual Funds, you have to properly understand it before investing. The top reasons for the popularity of Mutual Funds for building wealth are diversification, low cost of investment, beats inflation, convenience and higher returns.
Additional Reading: Introduction to Equity Mutual Funds
How does one start investing in Mutual Funds? As a beginner, you could begin investing via SIP (Systematic Investment Plan) on a monthly, quarterly or half-yearly basis. If you invest wisely, you’re sure to accumulate a lot of wealth. Remember this!
If you can’t wait to take your loved one to Switzerland, then a Personal Loan is the best option for you. Though you’ll get the required funds immediately, it’s going to cost you a lot more than the two options we discussed before. We wouldn’t recommend taking a Personal Loan to fund your dream vacation. But if you’re hell-bent on going on that vacation, you are free to apply for a Personal Loan. Just keep in mind that you’ll be paying hefty EMIs (interest included) once your vacation is over.
Got any other kick-ass ideas to fund your dream vacation? Let us know in the comments section below.