You’ve undoubtedly begun compiling a wish list for what to buy with your Diwali bonus. But, before you go on that lavish vacation or get that new iPhone, consider the numerous vital financial duties you may perform with this extra income.
SugerMint offers three suggestions for putting your Diwali bonus to good use.
Here are 6 smart ways to put your bonus to good use. One method to be financially fit is to have as little debt as possible; in particular, you should aim to pay off any outstanding credit card debt.
Here are six smart ways to put your Diwali bonus to good use:
Reduce your debt burden:
If you have a high-interest personal loan, credit card loan, or other short-term loan, the most effective method to use your bonus is to prepay the loan and reduce your debt.
This manner, you can enhance your financial health by avoiding years of paying excessively high interest rates.
If you have a home loan and are paying your EMIs on time, you can use the bonus money to pay off a portion of your outstanding loan. Paying off a percentage of any loan will help you get out of debt faster.
Boost your emergency savings
If you’ve had to tap into your emergency fund due to the various struggles of the past 18 months, a bonus is a great way to replenish it.
Financial advisors recommend that if you don’t have an emergency fund, you utilise the entire bonus money to build a cushion that can cover at least six months’ worth of costs.
Fund essentials to avoid new debt
You can use your bonus to purchase essential household items such as a washing machine or a refrigerator by paying cash rather than using an EMI plan.
Purchase now, pay later, and no-interest loans are all available. EMIs have made buying more easy, but they come with high interest rates of 15 to 25% per year.
Invest in fixed deposit accounts at a bank.
If you are a risk averse person who wants to build wealth safely and methodically, a bank fixed deposit FD is a good option.
Apart from that, it makes sense to keep some money in fixed deposits for asset allocation and diversification purposes.
Investing in bank FDs has a number of advantages:
- Planning short-term financial goals and contingency needs is worthwhile.
- A careful selection of plans/options (cumulative and non-cumulative, i.e. those that pay out interest on a weekly or monthly basis) might help you meet your liquidity requirements.
- Rather than keeping your money in a savings account, earn a better rate of interest.
- Are they deserving of consideration when it comes to short-term financial goals and contingency needs?
- A 5-year tax-saving FD can also help you save money on taxes.
- In just a few minutes, you can open a bank FD.
- When you are in desperate need of cash, you might prematurely cash out your bank FD or take a loan against it.
Invest in systematic investment plans (SIP)
SIPs, or systematic investment plans, have become a popular way to invest in mutual funds on a regular basis and for a long time.
SIP allows you to invest small sums in mutual fund schemes at regular periods. Individuals who invest in SIPs buy MF units in modest quantities at regular intervals, starting at Rs 500.
SIPs can be done on a daily, weekly, quarterly, monthly, or yearly basis, depending on the investor’s preference.
Investing in shares using a systematic investment plan (SIP) can provide good returns over time.
The best strategy to invest this lump-sum bonus money is to buy debt funds and then create a SIP with the same mutual fund firm for equity funds.
Make some advance payments
Make some payments in advance. To save money overall, make some advance payments on your monthly expenses wherever possible.
You can save money by purchasing an annual pack for your TV cable, internet subscription, gym membership, and other services.
This year’s Diwali: Use your money carefully so that your dreams/financial objectives may be realised and your financial future can be brightened. Take the necessary actions to ensure your long-term financial security.
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Wishing you a great Diwali!