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Financial Planning

How you can manage to attend every music festival - In India and Abroad

13 October 2016
Tips to find out how you can attend many of the major festivals around the world- without burning a hole in your pocket.
 

In the first Harry Potter book, Albus Dumbledore described music as a magic beyond all. I am not a wizard and don’t study at Hogwarts but I certainly do agree with Dumbledore’s opinion about music. This is why attending popular music festivals in India and abroad and sharing the joy of music with other aficionados has always been my ultimate dream.

Of course, this is easier said than done. Among popular music festivals, Sunburn is one of the only  ones that does not involve foreign travel. Other festivals will take me all over the world. I always thought that my dream of attending all these festivals would remain just that—a dream. However, that was before I came to know of the power of smart investing.

First Stop… Sunburn

I realized that the Goa trip to Sunburn could be worked out by saving money for just 1-2 months. So I started saving Rs. 10,000 per month from September 2012 and attended the festival in December. I travelled by train and used my credit card to book the hotel room. It was a well-planned strategy that worked. However, borrowing money is always risky and I wouldn’t recommend this for a foreign festival.

The European Music Bonanza

It cost me Rs. 2 lakh for each round trip to each one of the destinations inclusive of tickets, stay, travel insurance, and other expenses. Of course, I combined trips to save on travel costs.

I setup a SIP in January 2013 and targeted a corpus of Rs. 4 lakhs by mid-2015. Average returns of 16%-20% over the 2.5 years helped me achieve this goal easily. I could do this by investing just Rs. 7700 per month. Staying invested for more than one year meant the capital gains I earned were tax-free as well.

Related: 6 Short term investment options for your money

Going to the USA, Japan and Germany

For this, I opened a Recurring Deposit in January 2014 and invested Rs. 12,000 per month at 7%. Why invest in a RD when MFs offer better returns? Well, equity investments are never completely risk free. Secondly, I wanted to explore RDs to expand my knowledge of various investment options. I had to invest a higher amount per month because this was a low-risk low-return option. However, the surplus from my past mutual fund investments helped me reduce my RD contribution in the third year. On the whole, I found it to be a useful backup option.

Oktoberfest

I continued investing a reduced amount in the SIP as well as the RD and ended up with enough money to plan a trip to my favorite festival—Oktoberfest. I shall be leaving late but plan on staying till the very end of the festival.

Summary of Options

Time Frame

Financing Options

Risk

1-3 months

Use savings combined with credit card

Highest risk due to high interest costs

One year

Personal loan

Expensive option with high interest costs

 

Two Years

Equity investments

Short timeframe will require very aggressive investment strategy. A high-risk option that can backfire.

SIP in Equity Mutual Funds

A safer option as compared to equity. Lower risk of loss of capital with good chance of earning returns.

Three Years

 

Recurring Deposit

Lowest risk. However, may have to invest more due to low rate of return. Also, RD interest is taxable.

SIP in Equity and Debt Mutual Funds

Best option that offers scope for high returns with relatively low risk

A friend of mine decided to pay for the entire Oktoberfest trip using his credit card and repay the same by paying the Minimum Amount Due every month. I felt jealous until I discovered that it can take 36 months to repay a Rs. 10,000 debt if you pay the minimum amount of Rs. 500.A Warning

If you have borrowed money to pay for your foreign trip, then cut down on your expenses and pay as much as possible towards the loan. Options like credit card and personal loans are best reserved for emergency situations.

Instead of borrowing money, opt for systematic savings like I did and enjoy the music without any money worries whatsoever.  

 
 
 
 

"An investment in knowledge pays the best interest"

- Benjamin Franklin -

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