How You Can Achieve Your Dream of a World Tour

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Are you planning a world tour anytime soon? You can now make it possible with the right kind of investment and a solid financial strategy for the future. You can consider investing in an equity mutual fund to realize your dreams. However, there are a few aspects that you should always keep in mind in this regard:


  1. You should have a properly defined goal in mind- Know the amount that you wish to allocate for your world tour. Factor in inflation and cost increases over the next few years and reach an approximate figure that will be sufficient to cover trips to your desired destinations and for a specific tenure.
  2. Start as early as possible- If you start early in your career, then investing in mutual funds can prove to be a good bet. This will help you accumulate sizeable wealth by the time you reach the mid-career stage. You should begin early when you have lesser responsibilities and can take higher risks.
  3. The returns are not guaranteed- Remember that investing in mutual funds does not guarantee returns. You should be prepared for market risks and compare the various mutual fund categories before investing. You should be prepared to lose your principal in case of extreme market volatility (notional loss until you redeem in losses). Go into investing in mutual fund schemes with this approach towards risks, especially if you are focusing majorly on equity.


Once these three things are sorted at your end, you can get into the basics of investing in equity mutual funds.


Investing in equity mutual funds- What does it entail?


There are various types of mutual funds including equity, debt, hybrid, and more. The possibilities of earning higher mutual fund returns are more in the case of equity funds. However, even the top mutual funds in this category come with associated market risks. These funds invest majorly in stocks of several companies in a bid to generate wealth for investors. These investments have the highest risk in comparison to other fund types. At the same time, you should sync your investments with your specific risk profile.


Here are some core points that you need to remember about these mutual funds:


  • These funds are classified into various types like small-cap, mid-cap, multi-cap and large-cap, depending on the objective of investment.
  • Asset allocation is made throughout stocks of various large/small/mid-cap companies. Some funds also invest a smaller portion in debt and other instruments in the money market. This helps balance out risks.
  • You can also consider investing in ELSS (equity linked savings schemes) for getting tax deductions up to Rs. 1.5 lakh under Section 80C. These are mutual fund investment schemes that majorly invest in equity and equity-linked instruments and have 3-year lock-in period.


How to successfully build a corpus for your dream vacation with equity mutual funds


Remember that you should be patient in order to use equity mutual funds to invest in your dream vacation abroad. Here are some points that you should not forget:


  1. Invest for the long haul. Equity gives you good returns only when you stay invested for 5-7 years or 10 years. Hence, you should start as early as possible and maintain financial discipline throughout this period.
  2. You should be patient to ride out temporary market volatility and value fluctuations with equity mutual funds. Long-term investments will help you benefit from rupee cost averaging and compounding alike.
  3. Start small with SIP every month (the minimum amount is Rs. 500/1000) and gradually scale up the amount with increases in your income.
  4. Do not keep all your eggs in one basket. Diversify the portfolio to cover various types of equity mutual funds across categories and also allocate some part of the corpus for debt and other market instruments.
  5. You can redeem your mutual fund units anytime you with, with proper liquidity at the NAV (net asset value) that is applicable. However, you should hold your investments for long term to create wealth.
  6. When you are nearing your goal of saving enough for a dream world tour, reduce your risks with higher allocation towards debt in the portfolio in order to ensure that you do not miss your target.


You can allocate SIPs in equity mutual funds for your world tour plans. At the same time, do not forget to diversify your investments as mentioned. Keep some investments for your retirement and other financial goals of the family, without compromising on your necessities at the same time. Remember to have a contingency fund in place for meeting six-nine months’ expenses of the household as well. Here’s to starting early and planning a dream world tour ahead!


Disclaimer: Mutual fund scheme investments are subject to market risks; thoroughly read all offer materials.

Akshay Sharma

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