5 Things You Can Do with Your Vacation Money

1. Invest in what you want

3. Start with a Pension Fund

4. Invest in a Investment Funds Plan

An alternative for a savings account is a investment fund plan. This allows you to invest on a monthly basis or per quarter. You can invest according your risk profile. For many investment plans you don’t need any knowledge or experience. You can start with 25 Euro per month. So with vacation money, you can start your investment plan for your kids or as an extra alternative for your savings account.

On the following link you can compare different investment plans from different banks. 

5. Invest in Stocks or ETFs 

If you have invested in all of the above, you can still chose to invest in a stock or a diversified sector, country of index ETF. Always look at the cost of mutual funds if you want to invest in them. Listen to the following podcast of Kirk DuPlessis of Optionalpha.

Hidden Mutual Fund Fees Are Killing Your Portfolio Growth Curve

I sometimes get people like my mom who are saying to me, “What about this mutual fund that was recommended by the bank ?” So, I think there are things that people don’t really consider when it comes to mutual funds that might help out. First things first, I don’t think that I’m actually totally shocked that people still invest in mutual funds because we know most mutual funds have higher expense ratios than say an ETF or an index fund. I think the average expense ratio is at least over 1% still for most mutual funds. At least that’s according to Morningstar right now. And that expense ratio can actually trim a lot of your nest egg. If you think about how money compounds and how just even a 1% difference, even though it doesn’t sound like a lot, actually can really dramatically trim how much money you have after 30 years of investing. In many cases, it could trim hundreds of thousands of dollars and you don’t even really realize it. Listen to the podcast and make yourself smarter !

Final Words : How do we invest our Vacation Money ?

How did we invest our vacation money ? We always take a percentage % approach for investing our vacation money. We invested in three pillars of our Financial pyramid. Here’s the % split of our investments :

1. Emergency Fund : We did add 12% of our vacation money into our Emergency Fund. As we are now a family of 5 people, I need to increase our emergency fund for future emergencies like health problems or kids’ studies. We did not add this money to our savings account but to our monthly investment fund plan.

2. Investing for specific goals : We did invest 27% in my wife’s driving classes. My wife does have a driver’s’ license. But Belgium does not acknowledge this license of her country, so she has to practice the exercises and road rules in Belgium. Then she can apply for a Belgian driver’s license.

We also invested 1% to start a monthly investment plan for one of the kids.

3. Our Vacation location :  This year we are going on vacation to La Bella Italia. The first time we go as a family to Italy. We spend most of our vacations in France during past years. This year will be different. The remainder 60% of our vacation money will be put aside for the rent of our vacation home and money we need locally. We are looking forward to our vacation in one and half month.

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