SIPs and vacation planning Doing SIPs in your ‘vacation fund’ is a simple yet powerful way of accumulating corpus for your dream vacation

From Value Reasearch

The very thought of a vacation brings upon a smile on our faces. And why not? Vacation is something that most of us keenly look forward to. A vacation is not just about spending some time away from the hustle and bustle of our daily lives; it’s also about experiencing something new and spending cherished moments with your family. Indeed, many of us rediscover ourselves and our near and dear ones when we are holidaying.

But for many, a pleasant vacation remains just aspirational. From the demand of our professions to urgent monetary requirements, there are ample reasons that keep us away from saving for a vacation. As in most cases, careful planning can make things better here, too. If you already have the will to go on a dream vacation, there is a way – systematic investment plans or SIPs. Anyone can go on a dream vacation only if he/she takes the time to invest systematically and stay disciplined about it.

If the idea of planning and systematic investing makes you yawn, please be assured that it is the simplest and the most effective way to build a vacation corpus. The whole challenge is in initiating the process. Once you have committed to planning and saving for your vacation, the rest is just a matter of time.

So, what should you do? You can create a ‘vacation fund‘. In this fund, you can do monthly SIPs. You can start small if you can’t manage high contributions. Of course, you may invest in this fund after you have invested for your retirement and other crucial goals like the education and wedding of your children. With time, as your income increases, you can raise the SIP amounts going into your vacation fund. When you have the required corpus, you can withdraw from the fund. And voila, your dream vacation becomes a reality!

A good equity fund can act as your vacation fund. Equity can be volatile in the short run, but over the long term (five years or more), it gives good, inflation-beating returns. By doing SIPs in a good equity fund, you actually accelerate the growth of your money. It’s a proven fact that equity beats fixed income hands down. But don’t get intimidated by short-term volatility. Do keep a long-term horizon.

What’s more, share this SIP secret with some of your friends and they can also join you on the vacation. The more the merrier.

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