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Here’s how you can best use your diwali bonus
Published On , 1 Nov 2018 By HT
The thought of a Diwali bonus in your salary account brings a smile to your face. But if you are planning to blow it all up on the purchase of new gadget or something that gives you temporary gratifi cation this Diwali, hold on! You can use your Diwali bonus and strengthen your fi nancial future by investing in Mutual Funds.
Build a Contingency Fund
Life can be unpredictable and you never know when an unforeseen fi nancial emergency stares at you in the face. You can prepare yourself for such emergencies by building an emergency fund :
The emergency fund should take care of 3-6 months of expenses.
Liquid Funds are low-risk Debt-oriented Funds from an interest rate perspective.
They invest in securities with a short maturity period.
Units can be redeemed at your will within a day.
Secure your future with an STP
You can use your bonus as a lump sum to invest in a Liquid Fund and thereafter begin an STP or a Systematic Transfer Plan. Here is how it helps.
With an STP, you can transfer a specifi c sum of your money on a monthly basis from a Liquid Fund into an Equity Fund of your choice.
By doing so, you effectively avoid the risk of timing the market.
The Equity Fund can then be tied to a long-term Goal such as building a higher education fund for your kids or meeting retirement Goals.
Begin a new Systematic Investment Plan (SIP)
Do not want to invest the entire bonus as a lump sum as you have earmarked a portion of it towards an important purchase? Well then, consider beginning a fresh SIP with the remaining amount.
If you are a new investor wondering where to begin your investment journey, let the Diwali bonus provide you with some inspiration.
Use the Diwali bonus to begin a new SIP that can be tied to a specifi c fi nancial Goal.
You can use SIPs to meet short, medium-term or long-term Goals.
To meet short-term Goals consider Debt Funds, Balanced Funds to meet medium-term Goals and pure Equity Funds to meet long-term Goals.
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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Any investment decision taken based on the information provided in the content above shall be at sole risks, cost and consequences of the user.