Young India's Dream: Just 23, but want to fund European holiday by 25!

An increasingly aspirational young India, a segment of the population in its early twenties, is looking to break the shackles of tradionality. Now, with good paying jobs available, they don't want to just work and save for retirement, they want to have fun!  And travelling to far off lands is one of the top things on their to-do list. However, they don't want to do this on their parents' money, they want to fund it themselves and that too while they are still unmarried and without any responsibility. Here, we reveal how a working person in their early twenties can do it successfully and that too in just 2 years:

Going on an international trip in the initial years of professional life has become a trend these days. An international trip would drain your bank account if not planned well in advance, especially a European tour. Considering the currency conversion from rupee to euro, you would be spending a bomb on each expense. The best way to keep the costs on the lower side is by planning your trip much earlier and investing in suitable schemes to increase your budget for the trip.

Speaking on how to choose right mutual fund for a  European trip in next four to five years Archit Gupta, Founder and CEO at ClearTax said, "One can increase One's savings and invest one's bonuses and increments in suitable schemes to enhance the budget for the trip. While there are many investment options, there is none better than mutual funds. Investing in mutual funds gives you much-needed flexibility and the potential to earn high returns."

Dubbing SIP a better option Archit Gupta added, "An investor might have a notion that you need to invest a lump sum to earn high returns. That's not true as far as mutual funds are concerned. The existence of systematic investment plans (SIP) has alleviated the need for a lump sum investment. Through SIPs you can invest small amounts periodically. The investors are given the complete liberty to choose the frequency of payment. It can be monthly, quarterly, bi-annually, or annually."

He said that after reading about SIP, one might consider taking a loan and repaying through EMIs later as both require you to pay a fixed sum periodically. That's a bad idea, as paying EMI's over investing through SIPs comes at a very high cost.

On how to choose the right mutual fund plan for an overseas vacation in next four to five years Archit said that one needs to ensure to follow the below-mentioned steps while deciding on a specific mutual fund:

1] Approximately estimate the overall amount you are going to spend on your vacation;

2] Fix a suitable date and time of your vacation;

3] Assess your risk profile and requirements; and

4] Ensure to set aside a fixed sum to regularly invest in mutual funds.

Archit went on to add that after doing the exercise mentioned above, the next step is to shortlist the mutual fund. Considering your investment horizon is two years, you can opt to invest in any of the following funds via SIP:

1] Balanced advantaged funds: These funds combine stocks, debt instruments and arbitrage under one portfolio to generate high returns. These funds can generate returns of up to 10 per cent;

2] Ultra-short duration funds: These funds invest in fixed income securities. Ultra-short funds are capable of generating returns of up to 8 per cent; and

3] Short-duration funds: These funds invest in debt and money market instruments. Short-duration funds can generate returns of up to 8 per cent.

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"If you are planning to spend around Rs 3 lakh on your European trip, then it's advisable to invest Rs 13,000 a month for two years in any of the scheme mentioned above. By doing this, you invest Rs 3,12,000 at the end of two years, and if the rate of returns is 9 per cent, then the worth of your investment would be Rs 3,43,003! You can utilise the returns generated by your investment in shopping," concluded Gupta.