Why choose mutual funds to go an exotic vacation?There might be a question in your mind that mutual funds might take a lot of time to offer the returns that are required to finance your holiday and you can take a personal loan to finance the expense. This raises the classic question of SIP vs. EMI. Taking a loan to fund a holiday is not a wise approach under any circumstances for several reasons:
- You will have to pay high interest rates that can go up to 20%. This will significantly erode your savings.
- It will put a stress on your finances, and you will have to compromise on your other requirements.
- If you default in making even one EMI, it will negatively impact your credit score.
- You might end up in a debt trap jeopardizing your future financials.
Where to invest your money for your vacation?There are specific steps that you should follow before deciding on the particular mutual fund you should choose.
- You need to identify the country/region that you and your family members want to visit.
- Ascertain the total amount that the trip is going to cost you. Keep in mind the factor of inflation while determining this cost. The longer you wait for the trip, the more expensive it will be.
- Set a realistic date for your trip.
- You need to ascertain the amount you can spare every month for investment.