Many things are planned around this windfall amount that is received once a year. Some spend it all, others choose to keep the entire amount aside for a rainy day.
If you invest your Diwali bonus wisely, it will serve in the interest of your long-term financial well-being and illuminate your long-term financial future!
Let us share 5 smart ways to deploy your bonus money
Repay your outstanding loans
Credit card outstanding amount adds up a higher interest rate and you can pay it off first. If you miss paying monthly bills or pay only the mandatory minimum amount, you will pay interest anywhere in the range of 36-48 percent on the outstanding balance.
Prepaying the outstanding amount for big-ticket, long duration loans like a home loans, can also help you cut down the tenure of the loan. Repayment of outstanding loans, will enhance your credit worthiness and you would be able to save and in turn, invest more.
Build your emergency fund
Life often throws us nasty surprises when you least expect it and one needs to be ready to handle any such situation, be it the loss of a job, a medical emergency, or any other form of unexpected expense.
Ideally, you should maintain at least 3-6 months of your living expenses including EMIs in emergency funds. So it is wise to invest some portion of your Diwali bonus in such a place from where you can withdraw at a short notice.
Maximise Tax saving
Invest in tax-saving investment instruments such as Equity Linked Saving Schemes (ELSS), Public Provident Fund (PPF), National Pension Scheme (NPS), 5-Year tax saver bank FD, Senior Citizen Savings Scheme (SCSS), Pension Funds, and Term Insurance among others under Section 80C of the Income-Tax Act, 1961
Plan and Start investing for financial goals
An intelligent way to use this lump-sum bonus amount that you got, is to purchase debt Mutual Funds and then start a Systematic Transfer Plan (STP) for equity funds with the same mutual fund company.
It is important to understand, picking the right mutual fund schemes is extremely crucial. Your risk appetite and financial goals must be weighed in before selecting the right Mutual Fund schemes. Hence, seeking an expert opinion is recommended.
INVEST IN YOURSELF
Having a sound investment plan in advance will ensure, your Diwali Bonus does not stay idle in your bank account for too long. Rather than the amount, what matters is planning and how you execute it.
Here’s wishing you a very Happy Diwali and a prosperous new year!