Know how and where to invest your annual bonus
Every job, be it in Govt. or private sector pays more or less a nice amount of bonus annually to its employees. This annual bonus varies from few thousand and up to lakhs depending upon the company or the position of the employee. Now the matter is what to do with this extra money, which comes apart from our regular salary. Many have some or plans of buying a costly smart phone to making a holiday trip.
But smart and wise people always are in a motto of investing their hard earned annual bonus money. The perfect plan of make the most of the annual bonus is to invest it wisely in an investment scheme to yield good returns. There are many areas where one can invest this annual bonus.
One may play it safe without much risk by opening a fixed deposit account or investing in Govt. policies like Public Provident Fund (PPF), National Savings Certificate (NSC) or in Life Insurance Corporation (LIC) policies. Or one can take a little risk, understand and study the market and invest in stock markets, mutual funds, gold, etc. These type of investments are risky in nature as they depend on the present market condition. But they surely give you more than what you expect if invested wisely.
Out of many investment plans these are some options where it will be wise to invest in
- The LIC policies are a pretty common and smart investment option. The Life Insurance Corporation of India (LIC) is the biggest of all insurance companies in India. It has an approx. asset of nearly 16 lakh crore rupees. It started its business from Sept. 1956. According to market researches, LIC contributes nearly 7% of total GDP of India. LIC has got several insurance plans, investment plans (both long term and short term), child plans, educational plans, pension plans, etc. You can invest your annual bonus in a big single premium plan which has to be bought once and annuity to be enjoyed for the rest of your life. Or one can go for an endowment plan which gives minimum sum assured and as well as bonus additions. One can also take money back policies. LIC has a wide range of life insurance schemes which will look after your family even after your death. If you have a child, then it is very important to secure his/ her future. You can opt for a child plan so that you do not need to worry about his/ her education or marriage.
- Another wise decision is to invest in Public Provident Funds (PPF). They are long term guaranteed good return policies, completely undertaken by the Govt. of India. So they are safe and fraud free option to make investment. PPF accounts are of 15 years long term policy. In these 12 years one can invest from Rs. 500 to Rs. 1,50,000 per year in PPF account. The interest rate is fixed by the Govt. according to the market situations and is compounded annually. Any Indian national can open a PPF account in any nationalized bank or post office. One major advantage of having a PPF account is that it not only helps in Income Tax savings, but also the interest earned from the PPF policy is entirely tax free as it is a Central Govt. sponsored plan.
- National Savings Certificates are basically savings bonds with the Govt. It is a short time investment policy of say 5 years or 10 years. These bonds start from as low as Rs. 100 and one major advantage is that they have no maximum limit of investment. It is a entirely Govt. policy, so totally fraud free and safe plan to put your money in. They work on fixed interest scheme and the interest is pre- decided by the Govt. They also provide income tax benefits.
- Fixed deposits in banks are a common and popular tool to invest your money and get great maturity returns out of that. Almost every nationalized bank has got Fixed Deposit services. One can make their annual bonus locked in a fixed deposit account for as low as 3 months and get smart interest out of it on maturity. It I one of the most effective and feasible short term investment plan. If you have a plan of buying a car, 1year from now, it is a wise decision to put your newly received annual bonus in a fixed deposit account for one year. After one year, you will get back your money along with a nice share of interest amount. It is also safe and gives tax benefits.
- Recurring Deposits (RD) are one option of saving money in installments, may be monthly or quarterly or half yearly. By this, you do not have to give your entire money at a time. You can give the principal amount in easy installments. Every national banks gat got RD services. They issue separate passbooks for an RD account. The interest rates are also great so the maturity amount is good.
- Investing in gold is one very common way on making smart investment. Gold never loses its shine or its value. The gold rates always are in the path of rising just like real estate. So one can buy gold coins from banks which come in different sizes and proportions. They may sell them anytime they want and get the present day price. By this, the money is always in a liquid state. Government have recently come up with Gold Bond schemes and Gold monetisation schemes.
- Mutual funds are a way of investing your money in equity, or debt market. They are little complicated and risky in nature. If invested smartly with proper knowledge of market scenario, they will become very fruitful. It provides flexibility, liquidity and affordability to your invested money. Mutual funds may give you much better returns compared to other traditional investments. You can read a detailed article on the ways to choose mutual fund.
- Another way of making your money big is investing in stock markets. Here first you should have good knowledge about stocks and consult a broker before investing. Here risks are high but you got to take little risks to get maximum benefits. If you are a newbie in this then you can refer our faq about stock market trading.