{"id":16587,"date":"2022-09-21T14:02:47","date_gmt":"2022-09-21T08:32:47","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=16587"},"modified":"2022-09-21T14:02:47","modified_gmt":"2022-09-21T08:32:47","slug":"how-to-plan-for-a-big-expense-in-a-short-duration-efficiently","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/how-to-plan-for-a-big-expense-in-a-short-duration-efficiently\/","title":{"rendered":"How to plan for a big expense in a short duration efficiently?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69d27850cc77a\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69d27850cc77a\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/how-to-plan-for-a-big-expense-in-a-short-duration-efficiently\/#Fixed_Deposits\" title=\" Fixed Deposits:\"> Fixed Deposits:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/how-to-plan-for-a-big-expense-in-a-short-duration-efficiently\/#Debt_mutual_funds\" title=\" Debt mutual funds\"> Debt mutual funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/how-to-plan-for-a-big-expense-in-a-short-duration-efficiently\/#Low_duration_funds_Money_market_funds\" title=\" Low duration funds\/ Money market funds\u00a0\"> Low duration funds\/ Money market funds\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/how-to-plan-for-a-big-expense-in-a-short-duration-efficiently\/#Equity_savings_fund\" title=\" Equity savings fund\"> Equity savings fund<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">Everyone has to encounter big expenses like an international vacation, switching cities, and moving every once in a while. But most of us whenever we encounter such big expenses start saving for them or use our existing savings to meet these expenses.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">This approach is not beneficial as it reduces our existing savings and does not give any return as well. It is much better to invest instead of saving for an upcoming big expense.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">While we always encourage saving and investing consistently for the long term, we also understand that there are times when it is required to invest for a shorter duration.\u00a0<\/span><span style=\"font-weight: 400;\">Let&#8217;s assume you have to invest for a short-term goal for a year, so how do you go about it?<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The first step is to figure out the purpose. Is it to buy an expensive gadget; plan a vacation; to fund a vocational course?<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Once you know the purpose, you can easily identify the time horizon for which you need to stay invested. Let&#8217;s assume the horizon is as short as one year.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">For this, you&#8217;d need to invest in financial instruments that are less volatile, more liquid, and offer more or less guaranteed returns. Now, let&#8217;s look at our options:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"Fixed_Deposits\"><\/span><b> Fixed Deposits:<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">FDs can be a good option for 1 yr investment horizon. You can either invest in the same bank where you have a savings account or a new bank where you can get better FD returns. Besides, there are company FDs you can explore.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ol start=\"2\">\n<li>\n<h4><span class=\"ez-toc-section\" id=\"Debt_mutual_funds\"><\/span><b> Debt mutual funds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">You can also consider debt mutual funds for some extra returns. There are 16 categories of debt funds, but you only have to focus on two categories for a one-year investment.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"Low_duration_funds_Money_market_funds\"><\/span><strong> Low duration funds\/ <\/strong><strong>Money market funds\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Both these categories are suitable for a 1-year duration and provide slightly higher returns than FDs. If your investment amount is up to 1-2 lakhs, you can expect 1% higher returns than FDs, which could go up to 1-2k. But if you are investing a higher amount, those of you who belong to the 30% tax bracket should consider debt funds over FDs.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ol start=\"3\">\n<li>\n<h4><span class=\"ez-toc-section\" id=\"Equity_savings_fund\"><\/span><strong> Equity savings fund<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">If you don&#8217;t have a high-risk appetite, but want some equity exposure in your investment, you can go for an equity savings fund.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Such funds are called hybrid funds, these funds diversify your investments in equity debts and arbitrage. If your one-year equities perform well, then this can turn out to be an attractive investment. And if it doesn&#8217;t, debt and arbitrage can compensate for the losses.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Moreover, an equity saving fund&#8217;s taxation is superior to FDs and debt funds, so you would have to pay lesser tax.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The point here is to identify the goal as soon as possible so that you have the maximum time duration to make appropriate investments and gain good returns. This way you can accumulate funds for your goal without having to make a significant effort or dip into your existing savings.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>Read more:\u00a0<a href=\"https:\/\/kuvera.in\/blog\/category\/zen-and-the-art-of-investing\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Zen And The Art Of Investing<\/strong><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Watch\/hear on YouTube: Where to invest for one year<\/p>\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\">\n<div class=\"embed-container\"><iframe src=\"https:\/\/www.youtube.com\/embed\/f7yfzUhQDiM\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<\/div>\n<div><\/div>\n<\/div>\n<\/div>\n<\/div>\n<div><\/div>\n<\/div>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit\u00a0<a href=\"https:\/\/app.kuvera.in\/\">Kuvera.in<\/a>\u00a0to discover\u00a0<a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\">Direct Plans<\/a>\u00a0and\u00a0<a href=\"https:\/\/app.kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a>\u00a0and\u00a0<a href=\"https:\/\/kuvera.in\/user\/login\">start investing today.<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>#MutualFundSahiHai #KuveraSabseSahiHai!<\/p>\n<\/div>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Everyone has to encounter big expenses like an international vacation, switching cities, and moving every once in a while. But most of us whenever we encounter such big expenses start saving for them or use our existing savings to meet these expenses.\u00a0 &nbsp; This approach is not beneficial as it reduces our existing savings and [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/how-to-plan-for-a-big-expense-in-a-short-duration-efficiently\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":16588,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[99,593],"tags":[290,1575,1574,67],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to plan for a big expense in a short duration efficiently?<\/title>\n<meta name=\"description\" content=\"How should you invest to get the maximum return for an upcoming big expense? 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