Five ways to make most out of your diwali bonus

If an individual has been procrastinating the need to buy a family insurance plan outside of employer-provided cover then the Diwali bonus gives the opportunity to take corrective action.

Nov 10, 2015 11:11 IST India Infoline News Service

Feeder Funds
The Diwali festivities and celebrations put everyone in the spending frenzy. The time also marks the time when employers give away a part of the Salary as Diwali bonuses. Though the urge to spend such bonuses towards festival expenses is high, but there are far more prudent ways to utilise the amount, which are mentioned here.
  1. Invest in a mutual fund - Rather than spending the amount towards miscellaneous expenses, why not invest it in a good scheme, which will appreciate and yield returns. Moreover, one should not give importance to buying materialistic things that provide only short-lived gratification. Instead, the focus should be on long-term benefit as the invested amount can boost the corpus set apart for a specific goal.
  2. Plan for an appropriate health cover - If an individual has been procrastinating the need to buy a family insurance plan outside of employer-provided cover then the Diwali bonus gives the opportunity to take corrective action.
  3. Invest in child’s future - Rather than gifting a child with firecrackers or expensive toys, its better to gift them a bright future, which is possible by investing the sum in products that take care of children’s education and higher studies. At the same time, the Diwali bonus can be used to sharpen skills of a child by enrolling him in a class or any activity, which is fun.
  4.  Exchange Traded Funds vs. physical gold - The moment an individual receives a Diwali bonus, they tend to rush to the jewellery stores to buy gold. If such buying is driven to fulfil a family custom or a ritual, then consider going for Gold Exchange Traded Funds (ETFs), which serves the purpose and are relatively liquid than physical gold. Moreover, holding gold in electronic form eliminates its security and safety issue, which is a common fear while holding physical gold.
  5. Tax-planning - If an individual has to invest into schemes such as ELSS funds or other investment avenues that will help to save taxes, then Diwali bonus can be directed towards this goal. By doing so, an individual will effectively contribute towards tax planning ahead of the closure of the financial year and can reduce the tax outgo or tax burden in the forthcoming months. 

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