How to Start an SIP for your Dream Vacation?

‘Starting a SIP in your 'holiday fund' is the most effective way of building the corpus for that much-awaited vacation’ SIPs inculcate the habit of saving a fixed sum every year and help you meet your financial goals. If you also love to travel and travelling is as important as other financial goals just like buying a car, or your own house then you can benefit by creating a travel fund in one of the ‘best SIP in India’.

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SIP Benefits
Start SIP with as low as ₹1000
Start SIP with as low as ₹1000
No hidden charges
No hidden charges
Save upto ₹46,800 in Tax
Save upto ₹46,800 in Taxunder section 80 C
Zero LTCG Tax
Zero LTCG Tax^ (Unlike 10% in Mutual Funds)
Disciplined & worry-free investing
Disciplined & worry-free investing

Just like you, a lot of people have their bucket-list of dream destinations where they wish to jet off to and rejuvenate. From Universal Studios in Singapore to Skiing in the Swiss Alps, there are options galore.

While the thought of taking up a vacation brings the smile on our face, but the harsh reality is that traveling involves a good amount of money- whether you travel solo or as a couple or with your family.

And the reason why most of our vacations just remain aspirational is professional commitments, urgent expenditures – health or personal, and an ample of other reasons that never motivate us to save for a vacation. But with careful financial planning, you can achieve that too. If you already have the will to go on a dream destination, there is a way - SIP or Systematic Investment Plans.

So, we bring to you some prudent financial steps; that will help you unwind without stressing about sponsoring that long-pending trip.

So, What Should You Do?

You have the option to leave the money in your bank savings account but that money can be used for any urgent requirements. Because your savings account does not have a lock-in period, it gives you immediate access to your money.

And most of the times we end up using that money for some other expenses. You must be wondering why not start investing in an RD, but that also comes with a fixed tenure and if you withdraw it before the tenure, it will call for penalties.

So, the most simple and disciplined approach is to put aside a fixed amount in SIPs every month. As you do not have access to your SIP investments, there is minimal risk.

Moreover, you can easily automate your SIP investments. You just need to give a standing instruction to your bank and the ‘selected amount’ will be debited to your SIP every month.

And your money will grow at the ongoing SIP interest rate. In an ideal scenario, it is better to choose a SIP date a few days after your salary date, so that you don’t spend that money unnecessary.

How to Create a Holiday Fund with SIP Investment?

First, analyze the cost of your vacation and create aHoliday fundto build the desired corpus.

In this fund, you can start monthly SIPs. However, make sure that you invest in this fund after you have invested for your retirement and other long-term goals like your child’s education, his/her wedding, your retirement, etc.

The right approach is to start small if you cannot make huge contributions. With time, as your income increases, you can also increase your SIP contribution towards your vacation fund. When you have the desired corpus, you can withdraw the money.

And voila, your holiday becomes a reality! You can invest in any of the best Sip in India and start saving money, and then take as many vacations you want to take.

Here is an illustration of two couples who manage to take vacation often with their SIP investment:

Here are the two cases of couples who continue to take up vacations only by putting their money in a Systematic Investments Plan (SIP). Just like them you can also put your money in one of the best SIP in India and to quench your wanderlust.

Let’s see how they have been doing it so far:

Let’s take Delhi based Neha and Deepak Case

Millennial couple who prefer to save and spend rather than accumulate debt to fund their vacations.

They have created a separate vacation fund for their holidaying and contribute Rs. 10,000 to a SIP on a monthly basis. With a Systemic investment plan, they have been able to save for their holidays without depleting there regular savings.

Both of them earn well and love to spend on leisure just like most of us. In the past 18 months, they managed to take 3 vacations, including a 10-days trip to Europe and 5-day sojourn in Thailand.

But unlike most of us, the couple doesn’t like to rack up loans or swipe a credit card to make their bookings. As an alternative, they find it sensible to put Rs. 12,000-15,000 every month into a SIP in liquid funds for travel purposes. As most of the vacations are short-term goals and it if you start planning well in advance you would never have to postpone it.

Because the goal is short-term 6 months to 1-year or 2-years, the SIP returns really don’t matter. The idea is to build a travel fund. The objective is not to earn higher returns but to keep the money aside for a trip with your loved ones.

Now let’s see what are Reena and Ravi’s plans

  • They Plan to visit: Dubai on New Year’s, Turkey in 2020.
  • Budget: Rs 1.5 lakh for a 5-day trip (shopping extra)
  • Ongoing SIP: Rs. 10,000 with an FD of Rs. 2 lakh

Moreover, creating a separate travel fund has been beneficial for both of them. Last year, Deepak got a notification about an ongoing sale on the Singapore Cruise travel package.

It was a good opportunity to book a trip for their wedding anniversary.  Since they had a separate holiday fund they were able to seal the deal without having to dip into their savings or use their credit card. This is how SIPs give you an adequate sum at your disposal; so you can even go for spontaneous trips if there is a good deal, instead of making last minute costlier booking or racking your credit card bills.

If you also invest systematically in SIPs and stay disciplined about it then there is no stopping. So, if you plan to visit Bhutan next year and let’s, say you plan to spend Rs. 50,000 for a 5-days trip to Bhutan with your friends.

For instance: You can start an SIP of Rs. 5,000 per month in a separate travel fund. You can also use a SIP calculator to know how much you need to save and how much SIP returns you will get in a specific time frame.

Bottom line

As you can see how simple it is to plan and save for your dream destination through SIPs.  A bit of foresight, planning, and some motivation can help you meet your vacation goals without any hiccups. All it takes is starting a monthly SIP and there no more worrying about funding your getaways within Indian or abroad.

+For Mutual Fund midcap category Returns & for Insurance midcap fund category Returns-
*Past 10 Year annualised returns as on 01-12-2023
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:-
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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