Investing Rs 15k a month in Flexi-Cap funds for a Europe trip in 3yr. Good strategy?

Question

I am planning a major international vacation 3yr down the line.

I need about Rs 6L for this and started a monthly SIP of Rs 15k in a Flexi-Cap Mutual Fund.

I am expecting a 10% to 12% return to help me reach the goal faster.

Is this the right approach for a 3yr horizon?

Mohan Gupta · Accepted Answer

If your goal is 2 to 3yr away, equity is the wrong vehicle and you should opt for debt funds or FDs instead. Many investors mistakenly believe that equity always guarantees a 10% to 12% return in the long run, and they assume 3yr qualifies as long-term. While historical charts show you are highly unlikely to lose money in equity over a 7yr period, shorter timeframes are highly volatile. You will face severe sequence of returns risk if you rely on stocks for near-term expenses. You will not make a steady 12% every single year because returns only average out over a much longer horizon. If the market is delivering negative returns right when your 3yr mark arrives, your entire travel budget will be completely derailed. You need to solve the endgame first by figuring out exactly when you need the money and working backward from there. Money is supposed to get you somewhere, so choose your asset class based on the timeline of that specific goal. Move this SIP into a high-yield savings account or a simple FD to ensure the capital is actually there when you need to book your flights. Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

Investing Rs 15k a month in Flexi-Cap funds for a Europe trip in 3yr. Good strategy?

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