Wednesday, April 1, 2009

Transport & Savings Rate: 2 Important Variables

In order to realise half-time adventuring, you need to travel to the nearest or cheapest places first so that you can increase your savings rate in the early part of your adventure career. This allows you to invest more during the early part of your adventure career, giving you the advantage of compounding effects on investment. This means that, ideally, you should spend as little as possible on travel, and save as much as you could, during the earlier part of your global adventure. You should invest a large portion on a diversified portfolio of stocks fund (eg. mutual funds, unit trusts, exchange traded funds, index funds or pure stocks) ranging from 50-80% of the total size of your savings, and also a diversified portfolio of quality bonds ranging from 20-50% of it. Generally, stocks give you the best returns in the long run, but there are more down sides in the short term, something that you could cushion with the bonds.

In order to travel with minimal expenses, your half-time adventuring can start from your neighboring and regional cities or countries. Ideally, you should travel to all these destinations via bus or budget airlines. While you are covering these destinations, you give your savings sufficient time horizon to grow. After covering these cheaper destinations, you can proceed to further destinations later when these savings can pay for part or all of the
higher costs.

In summary, to optimize your ability to cover as many dream destinations as you can in this life, you should control the variables of transport costs and savings rates. When you are younge, you should reduce the transport costs as much as you could by traveling to nearer destinations, and increase the savings rate as far as you can by allocating as little on travel as you can.

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