7 PRODUCTIVE WAYS TO MAKE THE MOST OF YOUR BONUS

Investment | Published on Jun 03rd 2016 | Comment(s) 0
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Well, congratulations if you just received a little extra in your paycheck as a bonus! In this uncertain economy, money is hard to come by and extra money is always welcome.

You might be wondering as to what to do with this bonus?

We suggest, you should utilize this bonus productively in order to get the most out of it. Here are 7 productive ways to make the most out of your bonus:

Invest Your Bonus:

If you invest your bonus, it will make you happier in the long run. You achieve happiness by increasing your spending gradually rather than achieving a certain level of wealth. If you have been spending Rs. 5,00,000 every year since the last five years, you will less happy than someone who has been increasing their spending and has finally gotten to spending Rs. 5,00,000 a year after five years. This makes you feel that you are progressing and in turn makes you happier.

Weigh Paying Debt vs. Investing More:

The first thing to do after you receive some extra money, is to pay off all your credit card debts. Outstanding credit card balances are not really unheard of and it can be one of the most productive moves on your part. Pay off any high interest debt that you might have to save yourself the interest that you will have to pay over a longer period of time.

Retirement:

If you haven’t started thinking about your retirement, you should start thinking right now. Think about investing a large part of your bonus in retirement plans. By putting your bonus in such long term investment schemes, you get multiple benefits like better returns over long term, tax benefits and best of all, peace of mind. You can also defer paying taxes on the amount you contribute and build your retirement savings simultaneously. You can compound the savings with such similar future investments as well.

College and Higher Education:

If you wish to pursue some job-oriented course in the future or want to send your children abroad for higher education, then you need funding. You should use the bonus to invest in savings or a fixed deposit so that paying for education becomes manageable in the future. Start a college savings fund and save your money for that purpose.

Portfolio:

With a bonus on your way, you should consider rebalancing your portfolio. Just like your goals, your income and gains or losses change. Your investment portfolio needs to be adjusted from time to time. You should rebalance your portfolio by introducing new money into it, rather than forcing the sale of securities to rebalance it.

Savings:

If you are putting part of your bonus into a savings account, you should make sure that the account is offering competitive yield. Shop for the best rates available to you before you settle on any savings account because higher yield along with higher deposits will go a long way when it comes to savings accounts.

Invest a Lump sum amount on stocks

If you have received a bonus, you should consider investing a lump sum amount on stocks. If returns from stocks are taken into account, you will see that going all-out and investing is sometimes a better strategy, specially when you are flush with funds. The sole reason for this is because stock market rises over time so investing a lump sum in the right stock will earn you more returns than investing p




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