Covid19 has ruined our travel plans. We had to postpone our vacations due to conronavirus. A friend of mine, a fellow journalist, addressed by most of us as TJ, waits to celebrate her birthday every year, in some location on this planet other than the country of her birth. This year she had to settle for a long drive with her husband within an area of 200 kilometres of her house. We all are sailing in the same boat. But with high spirits, she has started saving and investing for a better and longer vacation to some unknown and unexplored place once the pandemic gets over. Some respite, and it surely is a great idea.
While most of us have seen paycut, we must agree that our expenditure has also slid down to some extent. Like whatever TJ had saved for her birthday vacation this year, lies with her unspent. Rather than keeping it in her savings account, she preferred to invest it according to her risk profile and plans ahead.
Taking some inspiration, here’s help with few calculations on how much should you save and invest per month to plan a great holiday after the covid crisis is over.
An example: If you want to spend around ₹3 lakh to plan a vacation after 3 years, you would need to save ₹7,700 per month at an assumed rate of return of 6% per year.
Some of you must be wandering why a 6% rate of return. Well, for a short time period of two years or three or four years, nobody expects you to invest in equities. The 6% rate of return assumed above, is the average return generated by the low duration debt mutual fund category.
Basis your risk profile, you can choose to invest in a bank FD or bank RD or a short term debt mutual fund. You must also consider the taxation part as per your income tax slab while deciding where to invest.
Here is a table to show some more calculations on how much should you save to plan a vacation in the short term, according to your desire and budget.
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You may seek help from your financial planner to help you with suitable investment options for your short term goals.