It is that blessed time of the year when your salary account gets credited with a bit more than usual. But do you remember how long that feeling lasts? Probably you will feast yourself with a vacation or buy yourself a nice gadget. However, remember within a very short period of frivolous spending your extra income disappears. During this entire process, seldom is we think about ‘investing’. I will discuss a few pointers on how smartly you can use this money to make it work better for you:
- Lose some burden: It makes more sense to bring down the debts with high interest rates, such as personal loans, mortgage loans, private finance loans, credit card etc. These debts pay off will encourage you to invest your income. Rather I would suggest you invest in instruments which pay you interest.
- Save for Emergencies: If you don’t have any debts you should first create an emergency corpus. Ideally, the emergency corpus should be 3 months or 6 months of your monthly expenses. However, you can leave this emergency fund in liquid funds. This is better than keeping your money in savings account where it won’t generate anything. In case of job loss or accidents, surplus quick liquidity serves efficiently.
- Build Wealth for goals: You might be thinking about the financial goals which you had in mind for a long period of time. Your bonus could be the best tool to achieve financial goals.
- Save Tax: To avoid the last-minute rush of tax saving during the time of March you should always be prepared in advance. ELSS mutual funds are the best way to save tax. You can claim a deduction of up to Rs.1,50,000 from your taxable income to effectively reduce your tax liability under Section 80C of the Income Tax Act, 1961.
Praise yourself and Celebrate! All your hard earned bonus which you receive at the year-end is finally working for you. It’s time now to forget about your financial problems and take your family out for vacation or spend time with friends.
Investing is all about discipline and consistency if you follow these two things you can expect your money to multiply manifold.
