Taking a sabbatical, without a sweat

Taking a sabbatical, without a sweat

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Taking a sabbatical, without a sweat

All of us at some point in our professional lives might have wanted to switch careers or take a sabbatical. If you are planning to take the plunge, this article is for you.

Everyone works. We all need money to sustain ourselves and our dependants. The economy only functions if people are productive and produce things which cost money to buy. Until we develop self-learning, Artificial Intelligence embedded robots, we still have to work.

It is therefore quite natural to be exhausted or worn out in the process. We start making small mistakes, feel overwhelmed at times which progresses onto fatigue and disillusionment with life itself. Or maybe you've just hit a wall, and life seems like “Tired Eyes” by Neil Young on repeat.

Well, it need not be that way.

Taking a break can help us find our passion, rediscover our goals. On this path of self-discovery, we might identify what we would love to do, and in turn, learn something about ourselves we never knew. Or maybe we just need to stop and smell the roses for just the heck of it. As far as we know, we have only a single shot at this thing called as life and we wouldn’t be happy if we are going to spend 40 years in a cubicle watching internet videos and reading this article.

Phase 1: Be tired/bored/fatigued (any adjective that denotes no existence of life)

If you’ve been reading this far, phase 1 ✔

Phase 2: Start planning your break

It’s possible that you want to storm into your boss’ office this very instant and hand over your resignation. Well, calm down. Your life isn’t a movie and we both know this is a terrible idea. However, instead decide on a start date and an end date. You might not always stick to the exact date but the general vicinity should do fine. Discuss it with someone you are close to. It could be your Dad, Mom, siblings, significant other, friends, colleague. It is important to understand how your life decision may affect them and they will be able to provide valuable feedback and keep you grounded in reality.

Phase 3: Managing your finances

This is the hard part. Since you’re out of a job and have no way of accurately predicting when the next paycheck is, it goes without saying that you need to start saving money.

First, you need to list out all your expenses and decide what’s essential and where you can trim the fat. Do you have any student loans, Home EMIs, Car loans? The best way is to clear all your debts if possible or factor them in for your monthly expenses. Do you have insurance cover in case you need to be hospitalised? Consider buying a term life insurance and health insurance even if you aren’t planning to take a break. It’s essential.

Once you’ve mapped out your expenses and the time horizon, you need to decide where to invest. Factor in risk as well. Investing directly in stocks might give attractive returns but is a volatile investment. Making the right choices would entail that you need to closely follow the market which unless you are a financial expert, would be tough. You can look at traditional saving instruments as they are secure.

However, what you consider is take the mutual fund route. Especially Systematic Investment Plans (SIP) as small amounts of money compounded over time has potential to deliver better returns than traditional saving instruments. The ideal time to start investing would be 3-5 years before taking a break. This would allow you to invest a small amount periodically and get better returns. Rupee cost averaging would help the investor weather volatility in the equity market and accumulate wealth over time.

During the break, the investor can consider systematic transfers into liquid funds which offer a degree of security and is suitable for regular income. Though past performance may not be indicative of future returns, data from February 2017 shows liquid funds have given returns between 7.7%-10.6% which has helped beat the inflationary cost. In addition to above average returns, liquid funds are generally considered a low-risk investment and can be withdrawn within a working day.

Finally, before taking the plunge create an emergency fund which can be roughly equivalent to 2-3 months’ salary. This amount should be left untouched in a bank and should be used only for emergencies.

Phase 4: Live young, wild and free.



Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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