The holiday season is around the corner with the schools about to break for summer vacations. Most families are ready to embark on that much awaited trip which has been eagerly and meticulously planned. Believe it or not, managing your finances which is perceived to be a complicated affair in fact requires just the same kind of planning!

• What should be the destination?

Your investment objective – First you have to decide what are the milestones you have to save for – like buying a house, childrens’ education and marriage or retirement.

• How long should your trip be?

 Your investment horizon – This would mainly depend on the investment objective and factors like the age of the investor, details of his dependents etc.

• What should you pack?

 The type of investments you should make in various avenues like equity, debt schemes, govt. securities. This would be determined by the person’s personal risk appetite, his age, current job profile and the investment horizon. Any investment plan you choose is a trade-off between risk and reward. Greater the risk you are willing to assume, higher the reward.

• How much would this trip cost?

 How much money would you have to save regularly/set aside to reach your desired investment objectives.

• How much cash should you carry along with you?

 Your short term liquidity requirements – Though liquid investment schemes like a savings a/c is very convenient as cash can be withdrawn immediately, these have a much lower yield compared to less liquid investments. Hence it is advisable to just keep the amount which you might require in an emergency as cash.

• Is your holiday likely to get extended for some reason?

 Most people form a rough idea of how long they are likely to live based on the average life span. It is important to keep in mind and provide for the risk of running out of savings if one lives too long.