Invest in mutual funds to reach your dream destination


Everyone will have a bucket list of their dream destinations. Many people save money for years to go on a long vacation. Since savings alone is not enough, they even opt for a loan to travel to their favourite country. But what if they plan in advance and invest the money instead of just saving? Financial advisors say one of the best choices is to invest in mutual funds.

According to the Ministry of Tourism, the number of domestic tourist visits in India during 2019 was 2321 million as compared to 1853 million in 2018, with a growth rate of 25.3%. Also, the number of Indian Nationals’ Departures from India during 2019 was 26.91 million as compared to 26.29 million in 2018, registering a growth rate of 2.4%.

Delhi and Mumbai airports accounted for about 41.7% of the total Indian Nationals’ Departures and the top 10 source countries in 2019 were UAE followed by Saudi Arabia, USA, Thailand, Singapore, Qatar, Kuwait, Oman, UK and Malaysia.

Forbes points out that in the first 10 months of 2020 alone, the pandemic costs the tourism industry $935 billion in revenue worldwide. Though tourism is one of the sectors that hit hard due to the pandemic, people are hoping that tourism will recover in 2022.

IT employees Saranya Balachandran and her cousin Abinaya Raghuraman have been planning their Europe vacation for quite some time now. “We do not want to apply for a travel loan and at the same time, we do not want to spend our savings on the trip. So, for a couple of years now, we have been investing in mutual funds,” says Saranya, adding that she got the idea from one of her seniors at work.

“I have seen my friends travelling after redeeming their investment and some have invested in a separate mutual fund scheme with an aim to travel in 5 or 10 years,” she adds.

Financial experts say that some of their clients are planning a short vacation and are redeeming investments. And, at the same time many clients are also investing keeping long-term vacation in mind.

Plan for long-term

Ashish Goel, Founder and CEO of Vista Wealth Consultants says that people have to do long-term planning and for this, they have to fix a goal.

“If you are planning to travel abroad, start with a small investment every month. Invest in diversified equity funds such as multi-cap or flexi-cap funds, as they will have a moderate risk. Within the equity space, you can also choose large-cap funds. These will help in creating wealth to fulfil your requirement,” Goel says.

For instance, if a trip to Europe costs 2.5 lakh and if you are planning in 2030, start investing a small amount in Systematic Investment Plan (SIP). If you calculate 12% growth in an equity scheme, you can achieve your target.

Goel says, “Keep monitoring your scheme every year to find out whether you are on the right track. If not, modify accordingly. Since it’s a long-term investment, one need not worry about stock market fluctuations in the short-term.”

Once you reach your goal- 2.5 lakh- you can redeem the amount and enjoy your vacation.

Always keep adding and do not stop your investments, say financial advisors. One can redeem a unit of a mutual fund on any business day. Once the investor submits a redemption application, fund houses allow online redemption. Also, investors get redemption proceeds within 2-5 working days. Redeem only the amount that you need for the vacation.

Goel says one of his clients accumulated money and got good returns that he used for his Europe trip before the pandemic.

If you are planning vacations within a year or two, you can start an SIP in Liquid Funds. Also, since Liquid Funds are low-risk and that you get good returns compared to your bank account savings, investors can choose the same to meet their short-term goals.

Santhosh Sridhar, a chartered accountant, says though it is not safe to travel at present, many of my colleagues want to travel after this pandemic and lock-down. “Earlier, we used to postpone even weekend vacations but this pandemic has taught each one of us to value time and achieve your bucket list dreams as soon as possible instead of postponing the same,” he says.

Though it will take some time to reach your dream destinations, it is time to plan and start an SIP so that you can travel with your loved ones with peace.

Key takeaways

1) Planning to visit world-famous landmarks with your family? Start investing now so that you can achieve your dream in a few years.

2) Investors can choose either Liquid Funds or Large-cap funds depending on their goals and risk-taking behaviour.

3) Balanced Advantaged Funds also provide good returns and involve relatively lower risk.

Disclaimer: This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.


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