The most popular festival of “Diwali” is just a month away. Memories such as Reunions, Celebrations, Gifts, and Sweets are connected with this festival. But, to execute all our plans, we need money. Right? I am sure all the salaried class would agree with me on this. “Diwali Bonus” is one of the most important motivating factors for us to work for the entire year. We eagerly wait for this credit message.
But the question is what do we do with Diwali Bonus?
Though I am asking this question, I know already you all have various plans to utilize this lump sum money. Mostly these plans include buying electronics, luxury items, renovation of home, jewelry, etc. Maximum plans are spending-centric. But as the bonus amount is quite large as compared to monthly salary or extra, we should plan it cautiously.
Best Chance to invest one-time?
A salaried person does not get lumpsum money as an income frequently. We get it once or twice a year. Hence, it should be planned. When it comes to investing, we often complain about not having enough money to invest. And when we get enough money, we plan to spend it instead of investing it.
Spending can be a necessity at times. But this money is the best one-time investment plan for sure. It can be effective for parents as well, who have a long-term vision and want to save for their children’s education.
Diwali Bonus can be considered as a “One-time investment plan for a child.”
Let’s see how can we invest this money?
Make Diwali Bonus as the best one-time Investment Plan:
You can invest this amount in different Investment Options:
Mutual Funds (Equity):
If you want to make a lumpsum investment in the Share market, Mutual Funds can be a better option. But considering the valuation, you can decide on the basis of your risk-taking capacity, and tenure of investment.
- When Markets are Pricy
It is not recommended to invest in a lumpsum when markets are at the top, especially when you have a short time frame. In this situation, you can part your funds in Liquid Mutual Funds or Conservative Hybrid Mutual funds. You can do a monthly STP (Systematic Transfer Plan) to the Equity Scheme.
This will allow you to invest in Equity and that too in a disciplined manner. Your cost will be averaged out and risk will be diversified as well.
- When Markets are Inexpensive
On the contrary, when the market is cheap or inexpensive, this is a golden chance to make a one-time investment in the market. Make sure to check risk & returns, scheme objectives, and tenure of investment. Create a diversified portfolio.
Mutual Funds (Debt):
If you are a risk-averse person, debt investments are preferable. Or you can go with the Hybrid (Equity + Debt) Mutual Fund scheme.
An aggressive Hybrid Scheme (for a higher time frame) or Conservative Hybrid (for a shorter time frame) is suitable.
Other Traditional Investment Options:
If you are not into Mutual Funds, other traditional investment options are also available for you.
Bank Fixed Deposits:
Considering the interest rate hike by RBI, FD rates are also on the higher side. You can make the most of it and invest in it. Please just don’t go by interest rate. Make sure the bank is financially healthy, reliable, and trustworthy.
Please note that according to the current rules of The Deposit Insurance and Credit Guarantee Corporation (DICGC), an amount of up to Rs. 5 Lakhs is insured.
For more information: https://economictimes.indiatimes.com/wealth/save/check-the-financial-health-of-your-bank-with-these-8-ratios/gross-non-performing-assets-npas/slideshow/74927100.cms
Public Provident Fund (PPF)
You can choose to invest in PPF. The total tenure of PPF is 15 years and is renewable further. Though it has a longer tenure, it is a safe option. The current interest rate for PPF is 7.10% p.a. It changes quarterly. Being a tax-free instrument at all stages, PPF is an attractive choice. Higher tax bracket people can consider PPF, due to tax-free interest.
If parents of children/toddlers open a PPF account on behalf of their child, this can be a good option for creating a one-time investment plan for their child’s higher education. PPF balance will compound for 15 to 20 years. It will help create a large corpus.
For more information: https://sbi.co.in/web/personal-banking/investments-deposits/govt-schemes/ppf
National Pension Scheme (NPS)
Being offered by the Government of India, NPS, a retirement benefit Scheme is a considerable option. NPS is designed for retirement, hence, there are very limited reasons available to withdraw money before the age of 60.
However, you can choose Equity and Debt (Asset Allocation) proportions in the scheme. With your age or choice, your Equity exposure will decrease. You can also choose your registered Pension Fund Manager.
Further, it also offers tax benefits over & above the 80C section under the Income Tax Act.
For more information: https://npscra.nsdl.co.in/features-and-benefits-of-nps.php
Sovereign Gold Bond Scheme (SGB)
Many women prefer to invest in gold on the occasion of Diwali. However, Sovereign Gold Bonds is the best way to invest in Gold. The total tenure of SGB is 8 years. No need to worry about storing gold ornaments, higher making charges or purity of gold. It even offers a 2.50% p.a. fixed interest rate on your investment.
For more information: https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=1658
Conclusion:
Diwali Bonus is the best chance to create a “One-time investment plan.” Financial Goals can be a child’s education, child marriage, or retirement. You can splurge on yourself but remember that investment for the future is always a wise decision.
Happy Diwali to you in advance!
Nice information shared
Worth thinking