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Don’t Let Your Mid-Year Bonus Disappear – Here’s How?

Fruits of hard work and patience are always sweet – this applies to your job too. Most employees have yearly appraisal systems, wherein they receive a salary hike and are declared a bonus.

Being awarded a bonus is surely an achievement. However, this lump sum amount may tempt you to splurge it on things you always wanted and with extra cash in hand, handling it can become tricky. It’s very common to hear people saying, “Live life king-size“, which one definitely should, but not at the cost of all your hard-earned money spent on momentary pleasures. You need to maximise returns from your mid-year perks by utilising it towards securing your future.

So, here are few ways to ensure that your mid-year bonus does not disappear into thin air:

  1. Get Rid of The Weight on Your Chest, Clear Your Debt

Let’s start with this simple question— Do you owe any debt- credit card, personal loan or home loan? If yes, then use your mid-year bonus to reduce your outstanding loan amount. Why? Because it’s always a smart idea to not waste money on interest payments when you have your bonus cash at your disposal.

The rule of thumb should be to direct at least 30 percent of your bonus to clear any outstanding loans. The goal is to get rid of your debt as soon as possible!

  1. Invest Bonus Towards an Emergency Fund

Life isn’t always fun and frolic. There could be rainy days where you would need more than just an umbrella. Unpleasant situations like accidents, emergencies, loss of job or other calamities may require you to spend a substantial amount of your savings.

To stay away from such turbulences, maintain a cash reserve or emergency fund that assist in difficult times. Use your bonus for the same. In days of chaos and emotional disturbance, where a lot of money could go towards hospital or medicine bills, cash-in-hand can serve efficiently.

  1. Get Yourself Health and Life Insurance Cover

Have you always been reluctant about buying health and life covers because you find the premium costs unaffordable? Don’t be! Today affordable health and life insurances are available to fit your budget and needs.

Health insurance is an absolute must-have, and under no circumstance should you think of not having one. Likewise, consider having term insurance, especially if you have dependents. It will secure them against financial hardships and protect their goals in your absence. Your mid-year bonus presents you the opportunity to get these essential protective elements for your family.

  1. Invest Towards a Financially Secure Future

Whatever you invest today can give you good returns in your future. So, make your bonus money useful and invest for long-term in equity-related products. There are numerous financial instruments available in the market, such as mutual funds, stocks, etc. However, one of the most reliable wealth creation options is a Unit-Linked Insurance Plan (ULIP). It is a product that offers dual benefits of ‘insurance-cum-investment’ and can be utilised towards various goals like:

  • Planning for Your Child’s Education

The price of higher education in India is constantly snowballing. In most cases, it is difficult for parents to fund for the higher education of their children. However, by investing in ULIPs, you can avoid such a situation and stand financially strong when the time comes.

  • Retirement Planning

ULIPs serve as a good investment option for your retirement goals. Investing in ULIPs for long-term can help you accumulate a substantial corpus for your golden years.

  • Accumulating Corpus for Different Life Goals

It’s ideal to invest in ULIPs, especially for those individuals who are between the age group of 25 to 35 years. ULIPs can be used to fulfil your goals like buying a new house or a car or starting a business and so on. Besides fulfilling these needs, ULIPs also provide tax benefits.

Why ULIPs?

ULIPs offer you the option to choose from numerous instruments such as debt, equity, and balanced funds. You may invest in equity funds if you are willing to take a high risk, while if your risk-appetite is moderate, you may invest in balanced funds. A risk-averse investor may opt for debt funds.

Another advantage is that insurers like Future Generali allow you to switch among these funds based on the market outlook (up to 12 free switches per year). Thus, you can obtain a higher return on your invested amount.

If you are looking to add ULIPs to your portfolio, make use of ‘ULIP Calculator’ to comprehend how much you need to invest towards your goals. Moreover, a ULIP calculator will make complex financial calculations easier, helping you get an estimated result and make the right investment decision according to your age, preferences, and budget.

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