How to invest wisely using your travel experiences

by Invisor Last updated on November 18, 2015 Tags: How-Tos

This blog by Invisor CEO Pramod Udiaver was originally published on Huffington Post Canada

Vacation travel is always fun, isn’t it? The days that lead up to the trip are probably the best part as you get together with your friends, family, or whoever is joining you, to plan the trip. Even if you are travelling alone, researching your destination and planning the trip builds up excitement.

Investing is no different than being on a long vacation. You need to start with a destination in mind and build your plan to get there. Think of the last time you took a long vacation. How did you plan and execute? What was your experience? What lessons did you learn?

Here’s how to invest wisely by applying the lessons from your travel experiences while planning for your investment goals such as retirement, education funding, purchasing your first home, or simply saving up for a rainy day. 

  1. Know your destination. When planning a trip you first refer to your wish list of places you want to visit then pick the one at the top of the list and start building your travel plan. 

    Investing is no different. You need to review your list of goals and pick one that is most important to you. The good thing about investing is that you can choose more than one goal and start working towards them simultaneously! The key is to know what your goals are and define them, no matter how long the time horizon is to reach them. Remember, the earlier you start, the better off you will be as time is on your side and investments grow over time.
  1. Always start with a budget. If you can't afford your trip today, you need to start saving money regularly based on how much you earn and how much you are able to set aside to fund your travel. Borrowing money for your vacation or paying with your credit card may not be a good idea and can end up costing even more!

    Prepare a budget for your investment goals as well. Pay yourself first by setting aside money to build your nest egg and fund other goals. Your budget may be totally arbitrary especially when a goal such as retirement may be several decades away. But it’s important to set a target (even though it might just be a best guess, there are several tools you can use), start working towards it, and revise it along the way.
  1. Don’t leave home without an itinerary. You may choose to work with a travel agent or prepare your itinerary by yourself, spending time to research your destination and the things to do. If you are taking a road trip, you may plan things to do along the way. In some cases, you could choose an organized tour, rather than figuring out activities yourself in a place you don’t know.

    Similarly, you’ll want to prepare a plan to achieve each of your investment goals. The key components of your plan should be how much you need to save on a regular basis, how you are going to invest your money, how much risk you are willing and able to take, and how often you will revisit your plan. Just as you may decide to work with a travel agent or tour guide, you may choose to work with a financial advisor who can help you put your plan in place and even manage your savings for you. Your financial plan should be your road map for your journey.
  1. Begin your trip fully prepared. After all the planning the big day finally arrives, and you get started on your journey. By now you have visualized how your journey will likely play out and considered things that could go wrong, such as illness or a flat tire, and prepared for it by carrying a first aid kit and a car jack, among other things. You may have even added a few extra days to your trip to account for any bad weather or construction along the way.

    Getting started early on saving towards your financial goals is very important. Remember, time is your intangible travel mate – don’t leave her behind! The earlier you start, the greater the opportunity for you to grow your investments. Use your financial plan as a GPS on your journey to know where you are and what adjustments you need to make along the way. Just as you wouldn’t let a flat tire or construction ruin your entire trip, don’t let a market event derail your plan. Look at the long run, the reason you are in it, and don’t overreact.

    Travel insurance protects you from losing money in case your trip is cancelled or interrupted due to unexpected events. Similarly, purchasing life insurance protects you and your family in case your financial journey ends abruptly. This may be an additional cost, but well worth it.
  1. Track how you are doing. Checking in regularly with your travel mates helps you figure out how you are doing. Are you on track with your itinerary and budget? Do you need to make any changes? Are you keeping your expenses in check?

    In the same way, checking in with your financial plan and/or your financial advisor on a regular basis is key to getting to your goal. What has changed since the last time you revisited the plan? Are you earning more and therefore able to save more towards your financial goals? Do you have a new family member to add to your plan? Do you have any new goals to add to your plan? Have any other commitments come along that are making it a challenge to save for your existing goals? How is your investment portfolio performing? Do you need to make any changes?

    Ensuring you keep your total costs of investing in check is very important as these costs (embedded with the funds if you are holding a mutual fund) add up and compound over time. Remember you could have an extra $26,000 in retirement if you simply reduced your cost of investing – learn how.   

It is key to recognize that investing is a journey, involves risks and costs, and therefore, needs careful planning to ensure you get to your destination comfortably. The earlier you set your goals and start investing with a plan, the easier it gets for you to reach your goals, as your good friend and travel mate, time, starts working harder for you!  

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