How to Utilise Your Diwali Bonus?

The festival of lights brings with it the Diwali bonus! After gobbling up sweets and lighting your houses, you might be wondering how to utilise this bonus efficiently. This article aims to help you guide on how to think about this whole process. 

First and foremost, it is essential to be as debt-free as possible when taking care of your finances. The only time it is advised not to clear off your debts and invest is when the returns on the investments are higher. However, it is preferable to pay off your debts. You can start by paying off your credit card debts or loans with high-interest rates. Paying off debts gives you peace of mind and also helps you reduce the interest added with additional time spent to pay off the loans. 

You can also contribute a portion of the amount to your portfolio. It does not matter if this is your first bonus or nth in counting. Investing is always a good option. To invest smartly, you will need to evaluate your goals thoroughly and identify where you might be lacking. Just like you clean your house before the auspicious festival, cut out any loss-making investments.

Review your short-term and long-term financial goals and assess your risk profile to explore more financial instruments. It is a great time to review your portfolio for your retirement plans, emergency corpus and investing for other milestones like owning a home or planning for higher education for your children. 

Some financial instruments to consider are government schemes, Public Provident Fund, pension funds, debt funds, liquid funds, etc., for conservative investors and equity funds, small-cap stocks, high yield bonds, foreign stocks, etc., for aggressive investors. You can also opt for alternative investments such as gold in physical form or through sovereign gold bonds. 

Investing is not always about financial instruments; it is also about investing in yourself. You can invest in yourself by either starting an art class you have always wanted to or taking that course that will help you meet that goal you have been putting in the back seat for so long. 

If you have some amount left or you want to spend your bonus without thinking about your debts or financial goals, this article can help you navigate through that as well. To spend money wisely, you need to start managing your money better. For this, you need to plan how you intend to spend.

Keep track of your budget and accommodate how this bonus will help with your planned expenditures. The best way to spend your money and be happy is through spending on items that let you enjoy an experience. It can be through planned vacations or spending time with family and friends, etc. You can also use this occasion to help people in need. 

For any clarifications/feedback on the topic, please contact the writer at jyotsna.singh@cleartax.in

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