If you have been expecting a hike in your salary, and a big fat bonus in your account, off-course it is a time to celebrate. Celebrating success is alright, but then celebrations cannot be at the cost of your savings. Well anyone would know 10 ways to splurge your hard earned income; we are here to discuss the right ways to utilize your bonus.
We all would agree to the fact that if bonus is spent in a right manner it can increase your money the next year around. Investing your variable pay in a right manner can prove to be beneficial specially in case there will no bonus or variable pay the next year. But before you make an investment some pointers given below can help you decide what to do with your bonus:
» Close your debts: Before you plan to buy the next i-phone or a gaming gadget, you must see if there are debts that you owe and clear those. Even if your bonus is not a big amount some amount is good enough to make a part-pre-payment of the personal loan you would have borrowed. For an example if you borrowed personal loan of Rs.4 lakhs, and you have received a bonus of Rs.2 Lakhs and if you pay this amount as a part pre-payment you will be able to save a lot on the interest amount that you would have paid.
» Invest before you splurge: We all have every right to spend our money, but it is better you plan and make an investment before you splurge it over silly things such as throwing a bonus party to your colleagues. You are sure to feel great about making an investment now. Experts opine that atleast 30% of your income should go as savings. Making a habit to save will help you allocate your income in the right places and earn better profit out of it.
» Compare and contrast: It is always good to compare various investment schemes before you make an investment. Checkout what works for your, whether it is stocks or fixed deposit or mutual funds, check the features, rates and costs thoroughly before you make an investment and you will certainly have maximum returns.
Various Ways to Invest your Variable Income/ Bonus
If you have already received your variable income or bonus and have decided to invest it, enlisted below are certain ways to invest your variable pay:
When you make a fixed deposit for a lock-in period you can invest a lump sum amount and earn an interest income on a monthly basis. You must ensure that you only invest in a highly rated corporate deposit having a AAA rating. You can also deposit in commercial banks that offer a good rate of interest. Corporate deposits can fetch you 1% to 2% higher returns than the bank fixed deposits which is around 6%.
Investing in an equity diversified fund is always a good choice as long as you do your research on the mutual fund. You can opt for the dividend option and get regular payouts. Enlisted below are certain points that you must check while investing in a mutual fund.
» Performance: A 3 year and 5 year return is better than those of peers.
» Cost: The expense ratio should ideally be lower than 2%
» Portfolio: You must see that the fund invests in known names and reputed firms only. The higher the number of such stocks, the better will be especially if you are not the type of a person that would take risk.
You can also invest in monthly investment plans also known as MIP offered by the Mutual Funds. However, this may not be the right time to make an investment in MIPs with the rate fallen and barely rate cuts on the horizon. MIPs are debt fund that may or may not invest in equity.
You can choose to make an investment in either one or many stocks. But you must note that the markets are on a high and keeping all the eggs in a single basket wouldn’t be a great idea. Therefore, make an investment in a many stocks than one, and choose from stocks having a good and consistent dividend history. Dividends can fetch you substantial income especially if you are investing a good amount of money in stocks, although you will have to do some basic research on it to crack it.
As long as you have a plan in place your money will stand a good chance of growing every year. Investing your bonus when the markets move up can fetch you a good return. Remember that all that come has not come for free, you deserved it and have labored hard for it, so do not just let it go but make it grow for a better future.Main Category: Finance, Popular Post, Others