Do you stay up at night fantasising about mastering that tricky turn or speeding along a long, empty road? Some like a sleek black Porsche GT or a Lamborghini Murcielago. Others just want a new Swift Dzire for their daily needs or a Mahindra Thar for off-road drives.
The first barrier, regardless of your ideal automobile, is saving up enough money to make the purchase. With proper planning, it is indeed possible to buy your dream car. Let’s look at how to start saving money for your dream car.
Essentials for saving money for the car of your dreams
Create your car budget
By this time, you have probably already looked up the price of your ideal car. It is now time to draft a financial plan. First, think about how much money you make every month and how much you are prepared to put aside for your dream automobile. Remember to set aside money for your car's insurance, gas and maintenance. Even if you do not own a car yet, it is a good idea to set aside some money regularly for it. Then, project and allocate a budget for all of these costs.
Invest Instead of saving
If you want to buy a sports car in the next 3-5 years, investing can be a better option rather than saving. You can do this through a guaranteed savings plan. ULIPs can also be your go-to option for good returns. By investing in ULIPs, you can earn higher returns and reach your financial goal much earlier.
How to Invest in ULIPS1?
A monthly investment of Rs 6,000 compounded at a modest 10.5 percent would easily allow you to purchase your dream car in 5 years. Here are the returns from ULIP plans, which you may configure so that you can withdraw from them at certain intervals:
- Rs. 6,000/month becomes Rs 4.7 lakhs after 5 years of compounding.
- After ten years of compounding, the amount is Rs 13 lakhs.
- After 15 years of compounding, the amount is Rs 26.5 lakhs.
- This becomes Rs 50 lakhs after 20 years of compounding.
Advantages of ULIPS*
When it comes to goal-oriented investments, ULIPs perform better. Below are some of the advantages of investing in ULIPs
- LTCG Tax requires you to pay out 10% of your capital gains when you withdraw. This means that if you have earned Rs 5 lakhs and wish to withdraw cash, you must pay Rs 50,000 in taxes. There is no such tax on ULIPs.
- ULIPs offer three tax breaks throughout the premium-paying, accumulation and withdrawal stages.
- It is difficult to withdraw from a ULIP without incurring fines. This may appear to be a disadvantage, yet it is actually highly advantageous. ULIPs' compulsory investment nature ensures that you do not divert your attention away from the larger goal.
- Because ULIPs are insurance products, they provide a death benefit. When comparing other products with ULIPs, this is an important factor to consider.
Key points to remember when saving up for your dream car
In summary, reduce unnecessary expenses to put aside more money for your dream car. Before thinking about purchasing anything, consider whether you are paying for a luxury or a necessity. If you do not need it urgently, you might be able to put off buying it. It would also be helpful to compare costs, just as you would do while shopping at the supermarket. If you pay attention to pricing, you can save a few extra rupees.
Whenever you receive a pay hike or bonus, try to invest that amount instead of spending it. These surplus investments can help you reach your financial goal early.
Once you purchase your dream automobile, make sure you maintain it so that it lasts longer. For more information on diverse offerings like traditional and guaranteed savings plans for life cover, child plans, and retirement plans, connect with our trusted financial advisor.