How to make best use of VRS?

The companies have relieved themselves by offering VRS to their employees, who in turn, face the dilemma of making the best use of such voluntary gains.

May 04, 2015 05:05 IST India Infoline News Service

Of late, most of the companies have added an option of VRS for their employees in the wake of a difficult operating environment. The most recent examples are Nokia and Foxconn plants in Chennai, which closed their factories and offered VRS to the employees. The companies have relieved themselves by offering VRS to their employees, who in turn, face the dilemma of making the best use of such voluntary gains. The problem of investing voluntary gains becomes even more crucial as there is a tendency in people to careless spends away such windfall gains. So, here are the best ways to employ voluntary gains for one's future use.
 
Do not consider upgrading lifestyle: A windfall amount does not mean that you should upgrade your lifestyle and help last the money in the shortest possible time. The idea should be to invest the gains in a manner that it starts providing a regular income stream to the family. The investment should be proceeded after ensuring goal and risk-based asset allocation.
 
Invest keeping future in mind: A person can invest the VRS amount either in Monthly Income Plans, Equity or debt funds of Mutual Funds, Post Office Monthly Income Scheme or Annuities. The investments should be made keeping in mind the tax obligations and returns.
 
Secondary income: A person who has opted of VRS should look forward to getting into employment if possible. In this way, the income stream from the invested VRS amount can become a secondary income for the family.
 
Do not use as a capital: If people wish to invest their VRS amount as a capital in a business, then it is one of the most disastrous ideas. Though a small percentage of the VRS amount could be diverted towards business, but staking everything is wrong.
 
Avoid the attraction: It will be not prudent to employ VRS amount towards buying a property or other superficial schemes, which bears the risk of eroding your income instead of creating one. 

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