Christmas and New Year are around the corner and with these holidays, coupled with the winter vacations of your children, travelling become popular. This time is the best time to go on a holiday and many families always plan a vacation around this time. Even your clients might be planning a vacation this Christmas holiday.
Vacations, though eagerly anticipated, incur a lot of money. Whether you are planning a vacation within India or abroad, taking a trip is expensive and individuals need to plan their budget for the same. Do your clients know how the budget can be planned?
Loans and mutual funds can help your clients plan their Christmas holidays. Both these tools help them plan their finances effectively so that they can undertake the trip easily. Let’s see how –
- 1.Tip #1: Loans for planning the trip
There are personal loans which are available in the market which your clients can take for their trip. These loans give them instant funds for their trip. Your clients can avail a personal loan easily as the loan is convenient to take and is offered with simple eligibility parameters. The benefits of availing a personal loan are as follows –
- The loan gives borrowers quick funds so that they can take their trip easily
- The repayment tenure is long enough to pay off the loan affordably. The repayment period allowed is between 12 months and 60 months and your clients can choose any tenure as per their suitability
- The loan has simple eligibility criteria enabling every individual to apply for the loan
- Funds are offered within the shortest possible time
- A personal loan is an unsecured loan which does not need any collateral security. The loan is offered based on your clients’ income level and is, therefore, easy to avail
Suitability of loans
If your clients have no savings at their disposal and they are planning a trip this Christmas a personal loan is suitable. They can apply for the loan from any financial institution and receive funds depending on their financial capability.
Things to keep in mind
Before your clients avail a loan for their trip, here are some points which you should advise them to keep in mind –
- Almost every bank and non-banking financial company offers a personal loan which can be used for multipurpose needs, including travel. So, your clients should always compare the loan offers of different financial institutions and choose the offer which has the lowest rate of interest
- Loans incur repayment and your clients are required to repay the loan in equated monthly instalments. When deciding on the amount of loan, they should always calculate the EMIs beforehand and ensure that they are affordable. Only if the EMIs are affordable would your clients be able to repay the loan timely without any financial difficulties
- Non-repayment of the loan would incur heavy interest charges and would also hamper your clients’ credit score. So, advise your clients to always repay the loan on time, every time so that they can avoid these possibilities
- The rate of interest on personal loans is slightly higher since the loans are unsecured in nature. That is why comparing becomes important so that your clients can get a loan with the lowest interest rate
- 2. Tip #2: Mutual funds for planning the trip
Mutual funds are investment avenues which your clients can choose to build up a travel kitty. These avenues help them to accumulate funds over a long-term period so that they can take that dream vacation that they have been thinking about.
Type of mutual funds and their suitability
Mutual funds come in different variants with the most common ones being equity funds and debt funds. The choice of a mutual fund scheme should depend on your clients’ travel plans. If they are planning to take a trip within the next couple of years, debt funds are more suitable since they have negligible risks and are unaffected by market volatility. For a longer term plan, however, equity funds are ideal. Your clients can invest in equity funds for a longer period of 10 to 15 years and accumulate a corpus for a dream vacation. Though equity funds are volatile, they promise attractive returns over a long term period and are suitable for building a good corpus. So, advise your clients to choose a fund depending on their travel plans.
- 3. Tip #3: The choice between loans and mutual funds
Now that you know how loans and mutual funds can help your clients in planning a vacation, you must be wondering which one is suitable. Well, the answer is quite simple, actually. For taking a trip this Christmas your clients should avail a personal loan and fulfil their travelling desires. At the same time, they should start investing in a mutual fund scheme for future vacations. You should advise them to plan ahead for their financial needs and mutual fund investments would allow them to do just that.
As a good financial advisor, educate your clients to start building their travel kitty with a good mutual fund scheme and amass enough wealth to fund their dream of a world trip, Europe trip or any other trip that their heart desires.
