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Three financial goals to help you get started with your dreams

Here are three goals that you can start investing for straight away and realise the benefits without waiting for too long.

Many of us don’t invest because we aren’t sure if there is anything worth investing for. The first time we really start thinking about investing at all is when we have to save tax and someone tells us about ELSS!

Being proactive with investing though, can literally pay. Imagine not having to be uncertain about money or when you hear news of lay-offs! What about knowing that you are heading for an amazing destination for vacation with your own money and there is no loan repayment waiting for you when you come back? For the more stable among us, what about looking forward to owning your own home?

Here are three goals that you can start investing for straight away and realise the benefits without waiting for too long.

#1. Start investing for an emergency fund

Why: If you have an emergency fund, you are much more prepared for uncertainty. Be it health related, job related, or family related, the unexpected should not throw you off.

Benefit: You can handle financial uncertainty from emergencies with confidence and ease.

Goal amount: Four months of your current take home salary. If you take home Rs 60,000, then your emergency fund should be about Rs 2.4 Lakh.

How much time will it take: That would depend on how much you can save and invest. Aim to save up this amount in less than two years. In the above example, if you save and invest about Rs 10,000 each month, you can reach the goal amount of Rs 2.4 Lakhs in two years.

Ideal place to invest: A good possibility would be a liquid fund because it is not affected by market movements and invests in relatively more secure debt. Barring that, even an FD works.

Since it is unlikely that you will wait for more than five years for a foreign vacation, it is a good idea to plan to achieve this goal in about three years. A possible option would be to invest in liquid or ultra-short-term debt funds.

#2. Start saving for a vacation

Why: Do you really need a reason for a vacation? It’s good to relax, especially if you don’t want a burnout early in your career. 

Benefit: You will be able to go on a vacation to a foreign location with your own savings and zero debt.

Goal amount: A ten-day European holiday can cost between Rs 2 Lakhs to Rs 3 Lakhs. Aim to save at least Rs 3 Lakhs.

How much time will it take: Since indexation benefit can reduce the tax you pay on the gains, a three-year planning period can be smart here. You can save Rs 3 lakhs in three years by investing about Rs 10,000 a month.

Ideal place to invest: Since it is unlikely that you will wait for more than five years for a foreign vacation, it is a good idea to plan to achieve this goal in about three years. A possible option would be to invest in liquid or ultra-short-term debt funds. 

#3. Start saving for a home purchase down payment

Why: At some point in your life you would want a place of your own. You might take a home loan but even then, you need to pay 20% of the cost as down payment. The earlier you plan for this the easier it will be. 

Benefit: By saving separately for the home down payment you won’t have to dip into your savings which might be meant for another purpose such as your child’s college education. You will also be a lot less stressed if you decide to buy a house.

Goal amount: This is a big amount and can range from Rs 20 Lakh for a Rs 1 crore apartment in Bengaluru to about Rs 6 lakhs for a Rs 30 Lakh home in smaller cities.

How much time will it take: Again, this will depend on how much you can save. Aim to start saving 6-7 years before your planned buy date, if you want to utilise the best available investment for this goal.

Ideal place to invest: If you have less than five years to plan for this, consider a short-term debt fund or a liquid fund. If you have about seven years, then a portfolio of diversified equity mutual funds would be a smart option, as the returns are about 12% annualised. This is generally higher than any other investment option over such time frames and can also beat inflation.

Your goals await! Get started today.

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