It’s that time of the year! Can’t hold your excitement for the bonus money that you will be receiving for all that hard work, can you? You may have already made plans for the bonus that you are about to get. Here are a few tips which can help you use that bonus wisely:
Clear your credit card dues:
Does repaying off those loans feel like a burden? It’s a good move to clear the loan which has the highest interest rate and provides no tax benefits. You can also choose to clear a personal loan over other forms of loans such as home loans or car loans. If you have taken a personal loan, you know why. Personal loans usually have higher interest rates compared to other loans. Also, you can clear loans taken from your friends or family. It will help you maintain your relationships well. Thus, do not be in a hurry to prepay your home loan. Instead, use that amount to invest for a long-term and gain.
Planning for retirement:
Retirement needs planning although most people do not pay attention to this aspect. One has to remember the fact that he will not be able to work forever. Thus, what you save today will determine how much money you will have during your retirement. With the living costs rising continuously, you need to accumulate a corpus which is able to beat inflation. Thus, with the bonus money, you may invest in schemes such as Public Provident Fund (PPF) and Employee Provident Fund(EMP) for your retirement. However, many people tend to neglect to invest and keep delaying it. However, with the delay there are many costs associated.
With the bonus money, you can invest for a long-term in equity mutual funds. You can also choose STP. A Systematic Transfer Plan(STP) can help you invest a large bonus amount to mutual funds. STP can help reduce risks as well. You can head to a financial planner if you want to know which financial avenues can be suitable for you to invest in.
You may have dreams of buying a home, car or any other expensive things of interest to you. So, set your money aside for these goals and do not withdraw money saved for another goal. For example, do not use the money you saved up for your child’s marriage to purchase a new house.
Bonus money for an emergency fund:
Save the bonus money to help you in time of uncertainties. Emergencies do not come planned. Plan your emergency fund and maintain a separate account to transfer that amount so that it is safe and handy. Park these funds in mutual funds or instruments where the withdrawal is easy. You can also invest your money in liquid funds which give you better returns compared to a savings account and the investments are also comparatively safe.
You have received this bonus money as a result of your hard work. It’s the right opportunity to use this money to reward yourself.