Article

What to do with your Diwali bonus?

Nutan Gupta

27 Mar 2018

When Diwali is around the corner, the first thought which strikes your mind is the Diwali bonus. As Diwali is a largely celebrated festival in India, thus exchange of gifts and giving a bonus to employees is a common practice.

Everyone feels excited about the Diwali bonus, but this excitement often leads to unplanned expenditures on non-essentials. While you always plan your increments, the attractive shopping deals right at the time of Diwali bonus woo you into buying a non-essential stuff.  

It is important to plan the Diwali bonus effectively beforehand. Effective investment of it will benefit you for sure. A few beneficial things which you could do with you Diwali bonus are:

Payoff your loans: You could easily pay off a large chunk of your high-cost debts. It is always better to pay off high-cost debts like personal loan, credit card bills etc. than going on the debts and investing surplus money into investments like fixed deposits. In a case when you carry on with these high-cost debts investing surplus elsewhere you end up losing money.

Build emergency funds:Emergency funds play a very important role on those rainy days. It is important that you build a fund for your emergencies. And Diwali bonus can be very helpful. You can keep a large part of your bonus for your emergency funds. This will help you in long term by saving you from taking a personal loan in the case of emergency. It will not only save the amount of emergency but will also save lots of money which you would otherwise have ended up paying a hefty interest on the personal loan.

Buy insurance policy: Investing your Diwali bonus in an insurance policy is a good option. Now that you get umpteen number of options in the market to choose from, insurance has definitely been into demands over the period of time. Buying a good insurance policy with good cover options will not only secure your future but would also help in tax planning.

Make long-term investments:Long-term investments always yield you with higher returns. It is always a better option to make long-term investments as and when you have surplus funds. And Diwali bonus once invested in long-term investments like company bonds, debentures, gold etc. could be a bumper bonus in terms of gains.

Make tax saving investments:Tax planning always remains an issue especially when you fall under tax slabs and are charged with hefty tax on your income. It is always better to use every opportunity when you can invest in tax saving investments. This will not only decrease the tax charged upon you but will also help you get better returns from the investments made. One of the popular tax saving investment is Mutual Funds where you get good returns and save on tax as well, unlike fixed deposits.

Plan a vacation: Investing into policies is another thing but sometimes investing into happiness and making memories in return is much more valuable. So plan a vacation with this Diwali vacation. Detox yourself, spend some quality time with family far away from the hassle of urban life.

Spend on essentials: Diwali bonus can be used to buy essentials which you were anyways planning to buy but were tight on the budget. To add on most of the brands across all the utilities offer good discounts and deals during the Diwali festive season. So you can get the things on a discounted price putting your Diwali bonus to a good use.

Conclusion:

While Diwali is a cause of joy among us Indians, what increases it furthermore, is when you get a good Diwali bonus. It is more important to use this Diwali bonus carefully than simply spending it recklessly. Above ways could come to your rescue if you plan to use your Diwali bonus sensibly for optimum benefits. Happy Diwali!!!

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 

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What to do with your Diwali bonus?

Nutan Gupta

27 Mar 2018

When Diwali is around the corner, the first thought which strikes your mind is the Diwali bonus. As Diwali is a largely celebrated festival in India, thus exchange of gifts and giving a bonus to employees is a common practice.

Everyone feels excited about the Diwali bonus, but this excitement often leads to unplanned expenditures on non-essentials. While you always plan your increments, the attractive shopping deals right at the time of Diwali bonus woo you into buying a non-essential stuff.  

It is important to plan the Diwali bonus effectively beforehand. Effective investment of it will benefit you for sure. A few beneficial things which you could do with you Diwali bonus are:

Payoff your loans: You could easily pay off a large chunk of your high-cost debts. It is always better to pay off high-cost debts like personal loan, credit card bills etc. than going on the debts and investing surplus money into investments like fixed deposits. In a case when you carry on with these high-cost debts investing surplus elsewhere you end up losing money.

Build emergency funds:Emergency funds play a very important role on those rainy days. It is important that you build a fund for your emergencies. And Diwali bonus can be very helpful. You can keep a large part of your bonus for your emergency funds. This will help you in long term by saving you from taking a personal loan in the case of emergency. It will not only save the amount of emergency but will also save lots of money which you would otherwise have ended up paying a hefty interest on the personal loan.

Buy insurance policy: Investing your Diwali bonus in an insurance policy is a good option. Now that you get umpteen number of options in the market to choose from, insurance has definitely been into demands over the period of time. Buying a good insurance policy with good cover options will not only secure your future but would also help in tax planning.

Make long-term investments:Long-term investments always yield you with higher returns. It is always a better option to make long-term investments as and when you have surplus funds. And Diwali bonus once invested in long-term investments like company bonds, debentures, gold etc. could be a bumper bonus in terms of gains.

Make tax saving investments:Tax planning always remains an issue especially when you fall under tax slabs and are charged with hefty tax on your income. It is always better to use every opportunity when you can invest in tax saving investments. This will not only decrease the tax charged upon you but will also help you get better returns from the investments made. One of the popular tax saving investment is Mutual Funds where you get good returns and save on tax as well, unlike fixed deposits.

Plan a vacation: Investing into policies is another thing but sometimes investing into happiness and making memories in return is much more valuable. So plan a vacation with this Diwali vacation. Detox yourself, spend some quality time with family far away from the hassle of urban life.

Spend on essentials: Diwali bonus can be used to buy essentials which you were anyways planning to buy but were tight on the budget. To add on most of the brands across all the utilities offer good discounts and deals during the Diwali festive season. So you can get the things on a discounted price putting your Diwali bonus to a good use.

Conclusion:

While Diwali is a cause of joy among us Indians, what increases it furthermore, is when you get a good Diwali bonus. It is more important to use this Diwali bonus carefully than simply spending it recklessly. Above ways could come to your rescue if you plan to use your Diwali bonus sensibly for optimum benefits. Happy Diwali!!!