Most individuals work round the clock to make a mark, at the year-end appraisal and hoping to get a sufficient bonus amount.
This is the time of the year when many companies along with appraisal declare bonus to their employees for their handwork and dedication. Most of the employees would have already started planning on how to spend the bonus amount.
If you are expecting a huge bonus, it is better to start planning on how and where to invest the amount. It is not advisable to spend all your bonus amount on non-income earning things. However, there is no harm is spending some amount on a hobby or for the family.
Before investing in any product make sure you have funds allocated as emergency funds which can be invested in bank fixed deposits, liquid funds etc., which can be handy in case of emergency.
Loans or debt
If you have any bad loans such as personal loan or credit card loan it is better to pay and close the debt, as they can hamper you credit score or credit history in case if you miss to make payments.
Good loans such as home loan which offer tax benefits can be last one in the list to make payments.
2) Higher policy
During the course of time if your standard of living has increased and your cover on policy is very less amount, it would be ideal to upgrade your policy or buy another which can fulfill the needs if you are not around.
3) Investing in kids future
The cost of providing good education has reached limits. In such conditions, if your children have plans to study abroad, make a special provision from your bonus amount. If you kids are small, consider investing in long-term mutual funds or stock markets.
4) Tax saving instruments
Individuals in higher tax bracket should closely consider tax benefits and invest in such instruments. There are many tax saving instruments and we should diversify the amount in such instruments based on the requirement and need.
5) Retirement funds
The major chunk of your investment can go into your retirement funds. The government has taken several measures to encourage individuals to invest in NPS.
6) Amount for down payments
If you are planning to buy a home in coming days, bonus amount can be of great use. Or planning a brand new car or vehicle, the bonus amount can be used.
7) Invest in equities, mutual funds
Young individuals can consider investing in equities, mutual funds. Others who have made an investment in such instruments can consider increasing the amount of investment.