New Delhi, July 17 -- For many families, an annual vacation is paid for through bonuses, short-term savings, loans, credit cards, or a large withdrawal from investments. This often means travel competes with investments, household expenses and other financial goals.

A more structured approach is to create a separate bond portfolio whose payouts fund the family vacation each year.

Consider a family that wants to spend Rs.3 lakh annually on travel. The aim is to use bond payouts for the trip without redeeming the principal or disturbing monthly investments.

The required corpus depends on the yield generated by the portfolio.

At a 10% annual yield, a Rs.30 lakh portfolio can generate approximately Rs.3 lakh a year before tax.

However, t...