Chase your Dream Car with smart investments!
With the New Year just ushered in, what would be the next big thing to add on your bucket list this 2018?
Don’t worry young dreamers, because we have an answer for you! Now that you are earning your own money, this could be your way to start saving up for your Dream Car.
With time on your side, if you put in place a well thought-out financial plan and follow a disciplined savings habit, you can achieve your long sought after goal.
As young investors, you should be aware of the two pillars of sound investing
The Power of Compounding:
The biggest benefit of starting early is the power of compounding that provides the foundation for time value for money. Even if you invest small amount for several years, it will grow to a large corpus. That is why it seems magical.
Balanced Investment Portfolio:
With your eagerness to start early, and backed by the knowledge about how the Power of Compounding could help you, the other basic rule is to have a balanced investment portfolio.
This strategy attempts to balance risk versus rewards by adjusting and rebalancing each asset in an investment portfolio according to investor’s risk taking ability.
This is how Rahul Sharma learnt it the smart way:
Every morning when Rahul opened his email, he would get an email from his bank on Affordable Car Loans and Easy Car Loans.
To purchase his dream car was one of his important goals in life. His plan was to wait until the car manufacturers would give the best deals on his dream car.
This generally would be during the festive season of December when he knew he could get discounts, cost-friendly insurance, extended warranties and of course, free gifts.
He contemplated these five years ago and decided that taking a car loan was not an option. So he did the next best thing. He decided to save for it.
After talking to his financial planner, he started investing in ULIPs where one has the potential to earn higher returns through investing in equity funds and also get tax exemption up-to INR 150,000 under Section 80C every year. The returns are also tax free under Section 10(10D).There is a minimum 5 year lock-in under ULIP plans which instils a savings discipline and also helps investors to reap the benefits of long term equity investing and reduce the impact of market volatility. ULIPS also offer huge flexibility.
The customer has the flexibility to book notional profits or switch from equity to bond or money market instruments and vice versa without any change in the product besides also offering partial withdrawals post completing the lock in of 5 years.
Come December 2017, when he saw an ad for his dream car in the newspaper, he knew that he had made the right decision to save in ULIPs, as he now had accumulated enough funds to buy his new car, without taking a loan.
Rahul is not an isolated case. Dreams and aspirations are a part of life and the only way they can come true is by saving and investing your funds in the right tools so that when time comes, you will have enough savings to make your dream come true