Smart Ways to Utilise Your Bonus This Year

You have worked hard the entire year for your bonus, now it is time to make your bonus work for you. A salary bonus is an excellent opportunity to boost your financial identity and race towards your financial goals. From finishing off debts to investing in income-generating instruments, there are numerous ways to use your bonus wisely.

In this blog, you will find three most effective ways to use your bonus. 

3 Ways to Invest Your Salary Bonus

If you are anticipating a salary bonus soon but are not sure how to utilise it for wealth creation, here are three tips to get you started. 

Invest in Mutual Funds

Use your bonus to invest in mutual funds as this instrument has the capacity to provide higher returns than fixed income investments.

These are the types of mutual funds you can start with.

ELSS Funds – equity linked mutual funds offer a dual benefit of tax deductions and wealth creation. At the time of liquidating your ELSS funds, you can claim a rebate of up to Rs. 1.5 lakhs under Section 80C. There is a 3-year lock-in period for ELSS, the shortest among all tax saving instruments out there.  

Liquid Funds – These debt funds help in emergencies as you can dissolve them instantly and get your cash back. Since they offer high liquidity and modest returns at low risk, investors park funds in them to meet emergencies or cover big-ticket expenses in the near future.

Pay Off Loans

Your bonus pay is a golden opportunity to pay off any debt or outstanding EMIs. You must rid yourself of debt even before you think of investing or saving your bonus.

Start by prioritising debt payments. Debts with the highest interest rates and zero tax benefits must be paid off first. These may include loans or credit card bills.

Create a Rainy-Day Corpus

Depending on the bonus pay amount, you can either invest the partial or the entire sum into an emergency corpus. Your emergency corpus can carry an amount equal to 3 to 6 months of your salary.

This liquid buffer can help you and your family members overcome unexpected medical emergencies, job loss, etc. Rather than incurring further debt due to unforeseen circumstances, stay prepared by creating an emergency fund using your yearly bonus.

Government bonds

If you want to invest your salary bonus in a risk-averse instrument while earning modest returns, invest in government bonds. They often prove to be a stable income source and provide high liquidity in addition to guaranteed returns. 

These debt-linked instruments come with a sovereign guarantee and invest their corpus in debt instruments issued by the central and state governments of India.  

Conclusion

Want to invest in mutual funds and see your money grow? Create an account with Tata Capital Moneyfy. Moneyfy offers a range of 1400+ mutual funds to capitalise on your salary bonus. Pick from a suite of investment instruments that can help smartly utilise your bonus

Lastly, don’t forget to have some fun with the extra money, especially, if it’s your first job and bonus. Be sure to spend some on yourself as well.  

To know more, head over to our website or download our app right away!