Got bonus and thinking where to invest? Read this

Got bonus and thinking where to invest? Read this

by 5paisa Research Team Last Updated: Feb 07, 2022 - 02:29 pm 37.9k Views
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Have you received a bonus or incentive and thinking about where to invest it? Your search ends here. Read on to find out the list of funds worth your attention.

Who doesn’t like bonuses or incentives? It is always something that is cheerful. However, there are three kinds of people and they would deal with it differently. One with no other thought would spend it as he wishes. The other one might think of investing it in equities and becoming rich and the third would either buy insurance policies or park it in bank fixed deposits (FD). Now the question is who among the three is right? We would say all of them, but there is a condition.

When you are thinking to spend the bonus, then ask yourself first whether it is a need or just an impulsive want. If it is a need, then straightaway spend it without thinking much. However, if it is your impulsive behaviour that is tempting you to splurge, then wait, think and defer.

Investing in equities from a long-term perspective is fine, but can it make you rich? The 10-year median rolling returns of Nifty 500 Total Returns Index (TRI) since inception is around 13%. Furthermore, if we look at the return distribution of this data then 53% of the time the returns were between 10% to 20%.

Breaking down further the 10% to 20% range, its 56% of the times the returns were between 12% to 15%. Having said that, it would take around six years to double your money with 13% annualised returns. Also, the risk involved would be higher as compared to bank FD. Moreover, for bank FDs and traditional insurance policies with rate of interest not more than 6%, it would take around 12 years to double your investment.

Therefore, in such a situation where the risk returns trade-off is not favourable, it makes more sense to invest in a Balanced Advantage Fund. Balanced advantage funds or dynamic asset allocation funds, alter their asset allocation depending upon the market valuations. This will ensure that you also catch the growth in equity and the fixed income part would take care of the downside risk.

In this post we have listed the top five balanced advantage funds/dynamic asset allocation funds, that can be thought of for investing your bonus.

Trailing Returns (%) 

1-Year 

3-Year 

5-Year 

10-Year 

Edelweiss Balanced Advantage Fund 

14.10 

16.59 

13.36 

11.81 

HDFC Balanced Advantage Fund 

20.81 

15.72 

11.77 

13.92 

ICICI Prudential Balanced Advantage Fund 

12.39 

13.30 

10.98 

13.43 

Nippon India Balanced Advantage Fund 

12.76 

11.93 

10.45 

12.61 

Aditya Birla Sun Life Balanced Advantage Fund 

11.21 

12.88 

9.64 

11.36 

 

Also read : With bond yields rising! What should debt fund investors do?

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