Taking a sabbatical or an extended break from work can be a life-changing experience. It provides an opportunity to pursue a passion, learn a new skill, travel, or simply rejuvenate.
It is essential to plan your finances meticulously to ensure your break doesn't turn into a financial burden. Here's a guide to help you plan your sabbatical without financial worries.
Understanding the financial implications of a sabbatical
A sabbatical is a period of leave from work that may last from a few months to a year, or more. As your regular income may be significantly reduced or become non-existent during this period, it becomes crucial to have a financial plan in place. Such a plan will help to ensure that your expenses are covered, and your long-term financial goals stay on track.
Building your sabbatical fund
Start by estimating the cost of your sabbatical. Consider all potential expenses, including travel, accommodation, daily living costs, and any expenses related to your sabbatical activities. Once you have a figure in mind, you can start building your sabbatical fund.
One of the most effective ways to build this fund is through a Systematic Investment Plan (SIP) in Mutual Funds. SIPs allow you to invest a fixed amount regularly, harnessing the power of compounding and the potential of equity markets to grow your wealth.
Securing your long-term goals
While you plan your sabbatical, it is essential not to lose sight of your long-term financial goals. Tools like a Public Provident Fund (PPF) Account or a National Pension System (NPS) Account can help secure your long-term goals, such as retirement.
A PPF Account, for instance, offers attractive interest rates and tax benefits, making it an excellent tool for long-term savings. Similarly, an NPS Account can help you build a substantial retirement corpus while also saving tax.
Creating a safety net
Having a safety net in place is crucial when you're planning a sabbatical. Fixed Deposits (FDs) can serve as an excellent safety net. They offer guaranteed returns and are one of the safest investment options. Axis Bank's Fixed Deposits offer attractive interest rates, flexible tenures, and the option for monthly, quarterly, half-yearly, yearly, or at-maturity interest payouts.
Moreover, you can use an FD Calculator to understand how much your investment will grow over time. This tool helps you calculate the maturity amount based on the deposit amount, tenure and interest rate. It aids in improving your investment planning and provides a clear understanding of your expected returns.
Investing for growth
While safe investments like FDs are essential, it's also important to include growth-oriented investments in your portfolio. Mutual Funds offer the potential for higher returns over the long term. They invest in a diversified portfolio of securities and are managed by professional fund managers.
Axis Bank offers a wide range of Mutual Fund schemes to choose from, catering to different risk appetites and investment goals. Whether you prefer equity funds, debt funds or balanced funds, you can find a scheme that fits your needs.
The experienced fund managers oversee the management of funds and utilise their expertise to carefully select securities that have the potential to generate high returns. They monitor market trends and make investment decisions based on thorough research, helping you grow your wealth over time.
Maintaining liquidity
During your sabbatical, you may need to access funds at short notice. Therefore, it's essential to have some investments that can be easily liquidated. Mutual Funds, for instance, can generally be redeemed quickly, providing you with the necessary liquidity.
Mutual Fund schemes offer the flexibility of easy redemption. You can redeem your units at any time based on the current net asset value (NAV). This feature allows you to access your funds whenever you need them, ensuring you have financial support during your sabbatical.
Also Read: [Who should opt for Mutual Funds?]
Conclusion
Planning a sabbatical requires careful financial planning. By building a sabbatical fund, securing your long-term goals, creating a safety net, investing for growth and maintaining liquidity, you can ensure your sabbatical is a time of relaxation and personal growth, not financial stress.
Remember, the key to successful financial planning is starting early and investing regularly. So, if a sabbatical is in your future, start planning today!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
