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What is a Vacation Savings Planner?
A vacation savings calculator is an online financial tool that helps individuals or families plan a vacation. It typically allows users to input details such as their estimated expenses (flights, accommodation, food, activities, etc.), travel dates and their current savings. Based on this information, the calculator then calculates how much money needs to be saved each month or week to reach their vacation savings goal. The tool provides a clear financial roadmap, helping you enjoy a dream vacation without going into debt.
Why should one use a Vacation Savings Planner?
1. You should know how much your vacations will cost to avoid rude surprises when you are travelling. Using the vacations savings planner you can estimate the total amount of money you need to save to fund your desired vacation after adjusting for inflation
2. You will know the monthly savings amount you should set aside to reach your goal in time for your vacation. It breaks down the total goal into manageable monthly contributions
3. Saving and investing every month keeps you disciplined and helps you accumulate more through compounding
4. The planner will keep you realistic in your vacation planning. If your monthly savings requirement is too high you should postpone your vacation. Accumulation is a function of both savings and tenure. You can increase your savings or increase the tenure. With vacation planner you can try different scenarios and plan your vacation accordingly.
What are the advantages of Vacations Savings Planner?
Many people end up spending much more on the vacations by dipping into their savings or overspending on their credit card, incurring interest costs. Both are harmful for your financial interests. With a vacations savings planner you can start saving for your vacation well in advance and accumulate the amount you require for your vacations.
When you are estimating full trip expenses e.g. travel, accommodation, food, local transportation etc, you may find cost efficient options. Furthermore, if you have a budget you will be more disciplined in your spending.
You can setup a dedicated fund for your vacations savings. With dedicated fund for vacations, you can avoid dipping into investments earmarked for important life-stage goals like buying a house, children’s higher education, retirement planning etc.
How to use the DSP Vacation Savings Calculator?
Using a DSP vacation savings calculator (click here) is easy and can help you plan and budget for your dream vacation. Here are the general steps to use it :
1- Enter the full trip expense at current costs. The full trip expense should include the:
(a) Travel cost
(b) Accomodation cost
(c) Food cost etc.
2- Planning to travel in :Mention when you are planning to travel i.e. in which months.
3- I expect an annual return of: this is where you need to mention the return that the investment will earn. It is best to put the number which is around the long term average.
4- Click on calculate button.
The calculator will tell you how much you save and invest every month in order to accumulate the desired amount for your vacation.
You can also use the advanced options which are:
5- Amount I am willing to invest now: Mention the amount you are ready to invest now
6- Expected inflation price : The expected inflation rate per annum.
What should one keep in mind while using the Vacation Savings Planner?
• Estimating costs: Be as detailed as possible in estimating costs. Apart from major expenses like travel and accommodation, try to estimate all possible costs that you may incur like local transportation, food, sightseeing etc. You should be conservative in estimating cost to avoid surprises and busting your budget.
• Reasonable rate of return: Vacation planning is usually for short to medium horizon e.g. few months or a few years. For short to medium term investment horizons, you should invest in low to moderately low risk products. Since risk and return are interrelated, you should input a reasonable rate to return for the planner to be useful for your vacation planning.
• Use the advanced options if relevant: If you have spare funds that you can invest for your vacation right now then use the advanced option. It will reduce your monthly savings requirement. If you are planning a vacation in the next one or two years, then you should also factor in inflation by using our advanced option.
Tips for vacation planning
1. Create a Dedicated Vacation Fund – You can start investing in a suitable mutual fund scheme through SIP with the specific objective of vacation planning.
2. Avoid Dipping into Your Vacation Fund - Resist the temptation to dip into your vacation fund for other purposes e.g. shopping. This fund should be exclusively for your trip.
3. Track Your Progress - Regularly monitor your savings progress to ensure you're on track to meet your goal. Adjust your savings plan if necessary, especially if unexpected expenses arise.
4. Stay Motivated - Keep your vacation goal in mind as motivation. The more motivated you are, greater will be your commitment to savings and investments to achieve your financial goal.
5. Consider Travel Rewards Programs - If you have credit cards that offer reward points on spending for travel (e.g. airfare, hotels etc), use them strategically to earn and use points or miles that can help offset travel costs.
6. Book Smartly - When it's time to book your vacation, look for deals, discounts, and promotions to maximize your savings. Being flexible with your travel dates can often lead to better deals.
Disclaimer
This tool has been designed for information purposes only. Investor should not consider above as a recommendation for any schemes of DSP Mutual Fund / third party mutual fund schemes. Data captured here is publicly available including information developed in-house. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice. Investors are requested to note that there is no assurance of any returns/capital protection/capital guarantee to the investors in any schemes of DSP Mutual Fund. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The Performance may vary from scheme to scheme and depends upon several factors including load structure, investment framework, AUM, Investment objective, sector diversion, asset allocation & internal risk management parameter. Investor before investing into any kind of mutual fund scheme should read and be aware of scheme specific risk factors including Risk-o-meter of scheme / benchmark, Investment strategy & objective, asset allocation, Load structure, Plan/options available etc. defined in offer documents (Scheme Information Document and Key Information Memorandum) which are available on website. While utmost care has been exercised while preparing this tool, the DSP Asset Managers Private Limited/ DSP mutual Fund nor any person connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information.
"All the returns shown are as per the category prescribed in latest AMFI Best practice Guidelines (AMFI BPG) and any such guidelines issued by AMFI from time to time. Category wise calculators used above is to provide conceptual clarity to investors or for educational purposes. Numerical illustrations are being used for SIP / SWP / STP calculators only for the categories to explain the power of compounding. “Past performance may or may not be sustained in future and is not a guarantee of any future returns”. These figures pertain to performance of the categories/situations as prescribed by AMFI by using the compounded annualized growth rate % (CAGR) prescribed against each category/situation and do not in any manner indicate the returns/performance of any of the schemes of the DSP Mutual Fund. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to any of the units of the schemes of the DSP Mutual Fund. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Note: Returns calculated by taking mean of 10-year rolling returns between 01/06/13 and 30/05/23 for various benchmarks. Mean returns are as follows: INR Gold 9.34%; Sensex: 12.64%; Nifty 50: 12.93% and 10-year G-Sec: 7.20%. (This note is as per AMFI BP)"
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