Smart Moves to Supercharge your bonus

It is that time of the year again when Santa comes with your yearly bonus in tow. You wait for it eagerly all year round, it is after all the reward for all your hard work. There are grand plans for it- budgeting in the necessities, planning those royal holidays, making a shopping list et all. And at the end of the year, we are back to where we started from. What follows, is a bit of repentance over the way this bonus amount was spent. So, come let us look at the bonus differently this year!

Firstly, allow us to give you a different perspective of your hard-earned money. Be it your salary, bonus or a redeemed policy- the money that you have in your hands today is worth many times more if invested correctly. For e.g. if you have Rs 100, think of it as a probable Rs 200 over a period of time. Where we err is in thinking of it as Rs 100 and trying to make the most of it today. Which, by the way, is alright as long as its budgeted properly. We need not wait for the bonus to buy necessities, with all the EMI options available these days. We need not spend all of it on whims or living up to a lifestyle expectation that doesn’t work for us.

Let us arrive at a 50:30:20 rule with your bonus. Here, 50% of your earned bonus is invested in the funds of your choice, 30% is used for necessities and 20% is for your leisure. Sounds good? Now, there can be variations and the money can be more effectively utilized. Say, you manage to buy your necessities over the period of last year with the help of EMIs and credit cards cashbacks etc- in this situation a part or all of this 30% can also be designated to investments.

Allow us to explain this with the help of an example. If your earned bonus at the end of the year is Rs 764,378, your division can be as illustrated below-

Assuming an ideal scenario where you are able to save the necessities as well, your principal amount ready for investment becomes Rs 611,502. We suggest you make an investment in an equity fund that gives you a rate of return of 15% on an average. It is a good time to introduce more equity in your portfolio. Let us see how this money can grow if invested right.

You can actually grow your money to almost 800% in 20 years. Imagine doing this for the bonus earned every year now! The power of compounding helps you accumulate an amount that can take care of your retirement alone. Ain’t that exciting? Yes, it is. Hence the ~6 Lacs being invested should be looked at as a probable Rs. 50 lacs in the future. That will save you from the whimsical spends that eat up your bonus every year.

Still confused about where to invest? Please get in touch with the financial consultants at WealthApp for an effortless and customized plan for you. We have the ability to get you the best of returns with the top mutual funds.

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