Handy access to surplus funds is always a blessing, not only when festivities are around the corner, but also to finance urgent expenses like repairing your car or paying hospital bills. As per reports, in 2017 alone, a year after demonetisation, consumers spent almost Rs. 11,200 crore on shopping through cards during the Diwali week. The numbers are only going to be larger this year, so think whether you too want to contribute to the number.
While making the festive season joyous for your family and yourself, it may be wiser for you to spend your Diwali bonus with an eye to the future. You can save a part of it for festive shopping, and dedicate at least 60% of it to invest. Here are some avenues through which you can see your Diwali bonus grow over time.
Invest In Equity Mutual Funds With An SIP
With your Diwali bonus in hand, you can choose to invest a lump sum in mutual funds. This is one of the highest yielding investment vehicles that can fetch you returns directly from the stock market without making your exposure to risk too much to bear. In case a lump sum does not look like a viable option, you can take the SIP route. Take the help of a financial advisor and invest smaller chunks of your bonus in SIPs so that you can gain better returns from the market. Your advisor will play your funds against a mix of large cap, midcap and small cap stocks. This will allow you to gain through interest compounding in the long run. You can start SIPs with just Rs.500 and can stay invested for as long as you want. However, the longer you hold on the SIP, the higher will be your gain owing to market actualisations and compounding.
Choose Gold ETFs
Buying gold is a Diwali tradition in India, and is considered auspicious too. So, what better way to spend your Diwali bonus? However, buying physical gold carries storage and security woes and raises concerns about purity too. So, invest in gold ETFs this Diwali. Purchasing ETFs gives you the same value as gold when you decide to sell. The only difference is that in case of gold ETFs you buy gold in paper instead of buying it in physical form. Also, with ETFs you can choose the maturity tenor and can stay invested for any length of time.
Put Away A Portion For Emergencies
While you are choosing varied investment avenues to park your bonus amount judiciously, you must also channel a portion towards your emergency fund. Either keep it aside in your savings account as money for a rainy day or simply use it to buy a term insurance, health insurance or life insurance. Emergencies will never come announced, so prepping for them financially will help you stay secure and financially independent. Plus, this is a good way to save up for loan EMIs, if you are paying off an existing loan. You can use these funds to pay timely EMIs when you need to divert your income elsewhere during times of need.
The Indian government or state-owned companies such as Indian Railways, National Highways Authority of India (NHAI), Housing and Urban Development Corporation Ltd (HUDCO), or NTPC Ltd release bonds of various amounts into the market. They use the money raised through bonds to fund a series of infrastructure and development work in the country. With the government stamp on it, bonds are one of the most lucrative and secured investment options. They safeguard your money against inflation promising a high interest over time. This Diwali, you can purchase bonds as per your financial capability from selected banks and reputed stock exchanges. But, in order to yield high returns, you will have to buy a bond and let it mature via a tenor of minimum 10-15 years. However, both your investment and return on maturity is completely exempt from tax.
Diwali comes only once a year, but a lucrative investment plan started on Diwali will last you a lifetime! So, set the wheels in action for an investment plan putting your Diwali bonus to good use.
The writer is CEO, BankBazaar.com
BankBazaar.com is a leading online marketplace in India that helps consumers compare and apply for credit card, personal loan, home loan, car loan, and insurance.