Whenever we see a luxury car that goes vroom right next to us on a signal, our heart behaves like a kid. A kid, that wants the exact toy his peer has. Soon enough, the brain overtakes the scenario and we are back to normal. If asked parents, they'll probably call this entire phenomenon of holding back 'Adulthood'. But what if you are a rebel? Will you disagree? Welcome aboard. This blog will motivate you to aspire. However, aspiration alone isn't likely to get you there. We may need a lot of planning on the way too!
Thus, do you plan to own a shining Beamer or Mercedes someday? Moreover, does that dream looks far-fetched to you? Do you think breaking down your dream into S.M.A.R.T. goals and steps, will be feasible? Even if you don't have enough money to save right now, you are doing just fine. Let us understand how to approach this conundrum. Start with the step by step guide below:
A tough question to be answered! Often, we'll hear Indians declaring that they want to own a chauffeur-driven, luxury car, however. When asked which one they desire, they will not give a satisfying answer and will have a puzzled expression. What's the learning here? Don't get the first step wrong. At least know what are you planning to buy. Even if you are confused at the moment, at least have a couple of options in the mind. Also, go granular in this one. Down to the variant, the model of your dream. This is going to form the basis of your next step.
What does your dream car cost? For the course of this article, let's assume that you plan to buy a car worth Rs. 30,00,000. That won't just be it. Do you have 30L in hand right now? Probably not! So, when are you planning to buy it? Let's say in the next 10 years.
Well let's break your bubble- Do note that the car isn't going to stay at 30L forever. Inflation is real. Hence, assuming the inflation to stay at a 6% per annum level, your pretty car is going to cost you about 53L when you are ready to buy it. Don't lose hope yet. This is just getting you prepared for reality.
Thus, began the journey of financial discipline. Of course, sooner or later you'll have to begin to save for your dream car. In fact the sooner the better. Now to assist you during this process it's a wise thought to use a Dream Car Calculator to dig into numbers. The dream car calculator will reveal the time frame in which you will be able to afford the dream car.
On the left, you’ll simply put in the future price of your dream car, maximum savings you can do at the moment, current savings (if any), and expected returns from your investment.
On the right, this would simply show that you’ll be able to buy the dream car after 15 years.
As a thumb rule, here is a simple flow chart that will help you decide if you should generally develop a habit of saving or not!
Remember we accounted for this value for 10 years. But now you don't have enough savings or enough to save to drive your dream car until 15 years. Again, don't lose hope and let compounding show it's magic yet again. Most of the investment journeys begin this way. We discussed step-up SIP a few posts ago. You may not be able to save enough right now, but as you grow professionally, let your portfolio grow at the same pace too!
Simply calculating using a step-up calculator, you’ll realize that if your step up your SIPs each year by 20%, you will be able to achieve the goal, just in time. It is indeed magic.
Therefore, even if you don't plan to buy a lavish expensive car, this blog serves as a guide on how to go about goal planning. May whatever is the dream, a car, a house, or something else, savings is the only route to achieve your goals. The key is to stay disciplined and let compounding do its wonders. Also, stay on top of your numbers. If required, keep on aligning your goals and savings at regular intervals.
See you rolling in your luxury car soon!