Festive seasons signify joy, enjoyment, family get-togethers and celebrations. Bonuses during such times add cheer to the festive mood. Although bonuses are money earned for the work done throughout the year, many of us look at it as extra money or disposable income. As a result, most of bonus money is spent recklessly on futile expenses and extravagant gifts. Here are few ways smart ways through which investors can efficiently use the bonus money to improve their financial position and reap benefits in the long run.

1. Security first – revisit your emergency funds:

Emergency fund is contingency money set aside, to help investor tide through in case of any mishap or accident such as loss of job or loss in business. Normally, it consists of 4 – 6 months of monthly expenses. Investors who have not kept aside any money for emergencies, now is the time to start. Bonus will provide lumpsum money which will help in creating this fund. Similarly, sometimes investors set up emergency funds and use the money for some expenses and forget to replenish the fund. Checking emergency balances and adding adequate money to the fund will help investors during the rainy days. This money can be parked in liquid or other low duration fixed income funds.




2. Allocate higher money and reach financial goals faster:

When investors plan for their financial goals, they allocate certain amount for certain time frame to reach the goal. Adding the bonus money to existing portfolio can help investors realize their dream faster. Imagine you have planned for your dream car after 5 years and now if you rightly invest your bonus, you can afford it much earlier. Investors can achieve this by investing the lumpsum amount in mutual funds to create a bigger corpus. Alternatively, depending on their risk profile, investors can also opt for Systematic Transfer Plan or systematic withdrawal plan in which they can park the bonus money in less volatile fund such as liquid fund and systematically transfer money in higher volatility fund.




3. Save taxes:

Planning early about taxes can save investors from last minute anxiety and stress at the end of financial year. Investing the bonus amount into equity linked saving scheme help save taxes on one hand and keep the regular salary for regular monthly expenses.

4. Buy gold on auspicious occasions:

Festivals are auspicious occasions to buy gold. However, purchasing physical gold comes with additional costs like storage and insurance cost. Investing in gold via gold ETFs is a convenient way of owning gold. Being aware of investment alternatives and planning smartly can help investors enrich their financial position using money from bonuses. Just like spending all the bonus amount is not a good idea, sacrificing needs and saving the entire amount will not make one happy. Having a right balance of savings, investing and spending will not only take care of festive expenses and gifts for your family but also will look after future financial needs.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.