A reader asks, “Sir, I love travelling and would like to go abroad on holiday once in two years. How do I plan for this without affecting my other long-term investments? When we went this summer it was a disaster as I had to stop investing for my retirement for five months. I don’t want this to happen again and plan ahead properly”.
Our robo advisory tool has a recurring financial goal calculator module and you can use this to plan for all such goals. This can be used for planning big-ticket annual expenses like school fees(!) too.
Let us consider the situation mentioned by the reader. He wants to go on a holiday every two years. That is in 2024, 2026 and so on. Let us assume he will go on 20 such holidays.
If the investment is made in an equity savings fund or conservative hybrid fund or balanced advantage fund then let us expect a post-tax return of about 7% (all these settings can be changed at will in the back-end but we recommend using conservative assumptions). For a more important goal like school fees, the investment can be done via RD or a liquid fund or arbitrage fund.
The inflation each year is assumed to be 10%. We shall also assume that the reader can increase his investments for this goal by 10% each year. We assume the current cost is Rs. 5 lakhs. This will change from destination to destination. If the maximum budget increases down the line, the calculation should be re-done.
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We then get an output such as this. The investing is assumed to start in the year mentioned and stop when the sum is required for spending. Since the goal is recurring, this means only the investment amount changes! Essentially you get a step-up SIP schedule that ensures you have enough corpus each time the goal recurs. A screenshot of the recurring goal calculator module is shown below.
| Year investing starts | Monthly investment required |
| 2022 | 23,233 |
| 2024 | 28,113 |
| 2026 | 34,016 |
| 2028 | 41,160 |
| 2030 | 49,803 |
| 2032 | 60,262 |
| 2034 | 72,917 |
| 2036 | 88,229 |
| 2038 | 1,06,757 |
| 2040 | 1,29,176 |
| 2042 | 1,56,303 |
| 2044 | 1,89,127 |
| 2046 | 2,28,844 |
| 2048 | 2,76,901 |
| 2050 | 3,35,050 |
| 2052 | 4,05,410 |
| 2054 | 4,90,547 |
| 2056 | 5,93,561 |
| 2058 | 7,18,209 |
| 2060 | 8,69,033 |
This is a screenshot of the recurring goal calculator module from the freefincal robo advisory tool. Four such goals can be accommodated.
While planning for recurring financial goals, it is important that investments for other long-term goals are not disrupted. A balance between the two is essential.