A celebration is the perfect way to honor a special occasion with the people you care about. Whether it’s a birthday, wedding or anniversary, you deserve to mark the event in style. We’ve got some ideas to help you save for that once-in-a-lifetime party or vacation without disrupting the rest of your financial plan.
Put it in the budget
You don’t need a huge lump sum to start planning for a special occasion. Set a monthly target and put it right in your budget. Even small contributions to your investment accounts can add up over time.
Select an account
There are many types of investment accounts. When planning for an event, the best choice is typically an individual or jointly owned taxable account. Investment accounts aren’t guaranteed the way bank accounts are, but they may provide comparable or possibly better rates of return. Your savings can grow even faster when you earn interest on the money you set aside.
Choose your funds
You may want to consider funds with low volatility, such as Homestead’s Daily Income Fund or Short-Term Bond Fund. But depending on how long you plan to save up, you might look into a blended portfolio that includes a small amount of a conservative stock fund, such as Homestead’s Value Fund. Equities carry higher risk and aren’t right for everyone, but historically they have delivered higher long-term returns. Regardless, when you’re just a year or two away, it will be time to move to a money market fund to reduce your risk exposure.
Saving for a special occasion is typically one component of a broader financial plan. Once you’ve met your goal, you’ll want to continue to focus on your longer-term objectives, such as retirement.
Debt securities are subject to interest rate risk, credit risk, extension risk, income risk, issuer risk and market risk. The value of U.S. Government securities can decrease due to changes in interest rates or changes to the financial condition or credit rating of the U.S. Government. Investments in asset-backed and mortgage-backed securities are also subject to prepayment risk as well as increased susceptibility to adverse economic developments. High-yield, lower-rated, securities involve greater risk than higher-rated securities.
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