Good news! How to earn money to make your dream vacation viable via investments!
The cost of travel and increasing exchange rates should be taken into consideration regardless of how much in advance you start saving for the trip.
Budgeting your holiday is a key component of planning your finances. The cost of travel and increasing exchange rates should be taken into consideration regardless of how much in advance you start saving for the trip. Another component of planning your holiday finances is to set a time horizon for your plans, i.e. when would you like to take the trip. This will help you decide the right investments. For long term goals (more than 5 years away) you should invest your money in Equity Mutual Funds which will help your money grow. For vacations planned in the next 3 to 5 years, invest in debt and balanced Mutual Funds. When it comes to short term vacation, there isn’t a lot of time for your investments to grow as you may need the money soon. In such cases, it is advisable to keep your money in a Liquid, Arbitrage Fund till you need it.
Speaking on how to make a travel plan economically viable Amar Pandit, CFA and Founder, Happyness Factory said, "Like any financial goal, your travel plans need to be backed by proper funding, specifically devoted for it. The key while planning for a vacation goal should be to understand that while planning for a vacation is important, it should not compromise investing for retirement, your health or any other important goals. Short-term vacation goals can be planned using your bonus or a part of windfall gains. Budget-friendly vacations can also be funded by making tweaks to existing cash flows. However, vacations coming up after a few years need to be planned. The ideal way to finance your vacation is by setting aside some money for it every month."
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Asked about the key factors that can make one's vacation financially viable Amar Pandit of Happiness Factory listed out the following:
Investing for vacation
You want your vacation fund to be easily accessible to you. Maintaining a Savings Account for your vacation fund is the most accessible, however, might not be the optimum way to go, as you always run the risk of using the funds for other expenses. Instead, invest your savings in a liquid mutual fund. This will clearly help you set that money aside.
Redeeming Investment for a dream vacation
It is prudent to redeem your investments when you begin booking your tickets and stay for the trip. This is preferably done 3-4 months prior to the date of travel.
Charting out financing options
You can look at other avenues to finance your holidays as well. With the travel industry booming, a select set of travel agencies have tied up with certain banks to allow travellers to book packages a year in advance and simultaneously start a 12-month Recurring Deposit (RD). The bank pays interest on the deposit, and at the end of the year, the travel agency puts one month’s installment to your 12-month contribution. Keep in mind that though these deals appear very tempting, they come bundled with several terms and conditions. You might be better off saving and investing on your own terms.
When setting money aside for your holidays, be realistic about your travel expenses, when you can take time off from work and the number of people travelling with you. Do your due diligence when researching the destinations and find out when is the best time of the year to visit, what are the clever ways in which you can save money on travel and stay, etc. Remember that by planning your holiday in advance, you will be able to create lifelong memories without burdening your wallet.