How to go for a foreign vacation every 3 years?
Walk-through: Get the SIP amount for recurring goals like a dream vacation every few years
How to go for a foreign vacation every 3 years?
Posted on 26 Jun 2021
Author: Sayan Sircar
Tags: 
Set Goals
4 mins read
Set Goals
📢Join 3500+ readers on WhatsApp and get new post notifications!
Walk-through: Get the SIP amount for recurring goals like a dream vacation every few years
📚 Topics covered:
- Asset allocation and target return for a recurring goal
- After one year of running the SIP
- A note on having the pre-requisites in place
- All posts in this series
Asset allocation and target return for a recurring goal
We have already covered
- how and why to set a goal
- how to get asset allocation for a single goal
- how to get SIP amount for a single goal
- how to get SIP amount for a goal with multiple payments
This post will deal with a recurring goal like going for a foreign vacation every three years throughout your life (for the next 30 years).
Assume that the goal amount is 4 lakhs (as per today’s cost) every 3 years for the next 30 years starting 2 years from now. So this is a plan for 10 vacations using the same framework followed for multiple goals with constant inflation of say 5%. We should keep in mind that inflation for vacations can be unpredictable due to how fuel prices, demand at various tourism locations and other factors play out.
Assume 2 lakhs is available today which is allocated to the first year’s vacation.
These are essentially 10 single payment goals:
- Goal 1: Vacation 1: 4 lakhs adjusted by 2 years of inflation in 2 years
- Goal 2: Vacation 2: 4 lakhs adjusted by 5 years of inflation in 5 years
- Goal 3: Vacation 3: 4 lakhs adjusted by 8 years of inflation in 8 years
- ….
- Goal 10: Vacation 10: 4 lakhs adjusted by 29 years of inflation in 29 years
Using the single goal model the following SIP amounts are determined and the totals are added up as shown:
The 40 lakhs initial cost of the 10 trips are expected to be around 93 lakhs over the next 30 years. The initial lump sum amount is allocated to the first trip since that will happen first. A single set of SIPs are created: equity 5154 and debt 22107 along with one lump sum investment in debt of 2 lakhs as per asset allocation. Refer to these posts for investing in equity and debt funds.
These calculations are explained in this Google Sheets workbook.
After one year of running the SIP
The following needs to be done in this order:
- find the new corpus (C) which is the sum of the current value equity and debt fund values
- review the goal parameters (new horizon is 1 year less, review the current cost of the goals to adjust for actual market inflation etc.)
- re-balance between the equity and debt fund values
- Increase the SIP figure by 10% (or more, the model will tell you)
See this detailed post for the process for reviewing.
A note on having the pre-requisites in place
At all times ensure that you have the following in place
- An emergency fund with 6-12 months of expenses
- A term insurance policy (unless you are retired with no income)
- A health insurance policy (separate from the company-provided one, if any) for 10-15 lakhs as a base policy with a 50-100 lakhs super-top up
- A personal accident insurance coverage to safeguard against accidents where you do not die but cannot earn
- No high-interest debt like credit card or personal loans
All posts in this series
Please see below:
- how and why to set a goal
- how to get asset allocation for a single goal
- how to get SIP amount for a single goal
- how to get SIP amount for a goal with multiple payments
- how to get SIP amount for traditional retirement
- how to get SIP amount for early retirement
- how to get SIP amount for all goals together
- how to get SIP amount for recurring goals like vacations
Related Articles
- How do you get from goal to SIP amount: Part 2
- How do you get from goal to SIP amount: Part 1
- How do you get SIP amount for early retirement (RE): Part 4
What's next? You can join the Arthgyaan WhatsApp community
You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.For resident Indians 🇮🇳:
For NRIs 🇺🇸🇬🇧🇪🇺🇦🇺🇦🇪🇸🇬:
Share on WhatsApp: To understand how this article can help you:
If you have a comment or question about this article
The following button will open a form with the link of this page populated for context:If you liked this article, please leave us a rating
The following button will take you to Trustpilot:Discover an article from the archives
Previous and next articles:
Latest articles:
Topics you will like:
Next steps:
1. Email me with any questions.
2. Use our goal-based investing template to prepare a financial plan for yourself.Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.
Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.
More posts...Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.
This post titled How to go for a foreign vacation every 3 years? first appeared on 26 Jun 2021 at https://arthgyaan.com
We are currently at 503 posts and growing fast. Search this site: Copyright © 2021-2024 Arthgyaan.com. All rights reserved.