5 Ways To Use Your Diwali Bonus To Grow Your Money

The festive season is here, and with it comes the most-awaited and well-deserved reward- the Diwali bonus! While some of you might have already received your Diwali bonus, most of us are expecting it to hit our accounts just a few days before Diwali.

Though it can be very tempting to splurge this amount on gifts and meals during the festivities, you must save a chunk of this well-earned bonus and use it to build wealth for your future.

Let us look at 5 ways to use your Diwali bonus wisely and maximise its value.

#1 Pay Off Your Existing Loans

A great way to use your Diwali bonus is to pay off and close any existing high-cost loans. You can start with paying off your credit card dues and any personal loans, and then move on to other debts like home loans. Paying off your loans, especially the ones that charge a higher rate of interest, can make your financial life easier and will also help in enhancing your credit score.

#2 Invest Your Diwali Bonus In Mutual Funds

If you have never invested your money before, let this Diwali be your auspicious start. You can start by planning your financial goals by breaking them into short-term and long-term goals and then assigning the portion of your to be invested for each goal.

For short-term goals like a vacation, you can consider investing in debt mutual funds as they offer steady returns at low risk and are highly liquid. Investing in debt funds instead of keeping your cash idle in a savings bank account can help you reach your goals faster as they offer better returns.

For long-term goals like children’s education, retirement planning, etc., you can invest in equity mutual funds. These mutual funds have the capability to earn good returns in the long term and are hence ideal for wealth creation.

Moreover, if you still have not made any tax-saving investments for the financial year, you can invest your Diwali bonus in a tax-saving ELSS (equity-linked savings scheme) mutual fund. With tax-saving ELSS funds, you can reduce your tax outgo while also earning good returns.

#3 Increase Your Existing Investments

If you have already been investing, this Diwali, you can also use your bonus to increase your existing investments. For example, if you have an ongoing SIP for a long-term financial goal, you can invest an additional amount into the same fund. This can give a boost to your SIP investment and help you reach your financial goals faster.

#4 Get A Health Insurance Cover

Most of us may be reluctant to purchase health insurance coverage to avoid paying the premium costs. However, the pandemic has taught us that a medical emergency can come knocking at our doorstep at any moment and the hospitalisation costs can be far more than the premium cost of a health insurance plan. Hence, getting a health insurance plan for yourself and your loved ones is a must-have. Your Diwali bonus can be used to invest in this essential cover for yourself and your family.

#5 Build Your Emergency Fund

It may be difficult for many of us to set aside a specific amount from our monthly salaries to build a contingency fund. This is where your Diwali bonus can help you. Invest your Diwali bonus in short-term liquid instruments like term deposits, gold, etc. that can be used to build your emergency fund. Ideally, it is advised to have an emergency fund big enough to cover 8-12 months’ expenses.

Also Read: BQ Money Workout: Before You Even Think Of Saving, You Need An Emergency Fund