How to save for purchasing a car of Rs 10 lakh in five years?
Every individual has different types of goals like purchasing a car, bike, house, property, etc. There should be a proper financial plan for the same so that, you won’t get any financial pressure when you purchase an asset. If there isn’t a lot of time for achieving the goal of purchasing a car, one shouldn’t consider investing in equity markets as they are very much volatile in nature, which might not deliver returns as expected. One should invest in equity for longer-term in order to receive optimum benefits for long-term goals such as retirement, children’s education or marriage, etc.
For fulfilling this particular goal, one should invest in debt mutual funds, which will deliver consistent returns with minimal risk. If anyone is willing to take additional risk, then they can invest in equity too. One might have to dedicate a larger amount towards investment for fulfilling your goal if the goal is near-term. On average, debt mutual funds offer 8 per cent-10 per cent annually.
So, let’s know what amount you must invest every month in order to fulfill your goal:
Investment goal: Rs 10 lakh
Rate of return: 9 per cent p.a.
Term (period): 5 years
Monthly investment amount - ?
As we can see in the above picture, in order to fulfill the goal of purchasing a car, one will have to invest Rs 13,159.66 every month in a debt mutual fund. The above calculation is just for the sake of analysis purposes.