Got Diwali bonus? Here are your best investment options for big returns

Diwali 2019: Topping up your SIPs, settling impending debts, filling one's investment loopholes and eye on tax-saving are top four tips to use Diwali bonus.

Diwali 2019: While a Diwali Bonus does take the edge off, a lot of people are unsure over how to put it to good use. Photo: Reuters

Diwali 2019 has come out with lots of bonanzas that include 5 per cent hike in DA, 5 per cent hike in TA, performance-linked bonus to various state government employees, festival bonus to Indian Railways employees and various other government employees. Since the DA has been announced in October, all government employees are expected to get three month arrear (July, August and September). Apart from the government employees, some salaried individuals working in private firms do get Diwali bonus from their employers, so all these earning individuals are looking for an investment option.

Speaking on the matter Rahul Jain, Head, Personal Wealth Advisory, Edelweiss said, "The festive season has set in and along with the celebration, comes that little burden on additional expenses we incur during this time. While a Diwali Bonus does take the edge off, a lot of people are unsure over how to put it to good use. The most important factor to help you strategize better is to treat the bonus as a regular income, and not particularly an added bonanza which brings along with a strong urge to splurge on non-essentials."

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Asked about the best options to invest the Diwali bonus Rahul Jain listed out the following 4 ideas to spend the bonus amount received during Diwali wisely:

1] Topping up your SIPs: The market has been dole drums for the past few weeks; hence if you want to protect yourself from the market volatility, it is always better to shift your focus towards mutual funds. Not only will you protect yourself against volatility, but a periodic increase in the amount of your investments will also serve you good in the long run. Unless you have outstanding payments or debts that you need to clear, putting your Diwali bonus into lucrative investment avenues is always the best decision and indicative of smart financial planning.

2] Settle Impending Debts: The festive season will serve as a good time to clear any impending debts you have in your kitty. Start by clearing off your credit card bills, pay the personal loan and prepay any part of the home loan. Prepaying a big-ticket loan can help you to cut down on the tenure of the loan.

"Paying off these dues as soon as possible will help you to reduce the interest burden. If you cannot fully prepay, you can at least pay a part of it using the bonus amount, as this can also reduce the interest outgo to some extent. Paying off your EMIs and clearing off your debt on time would help you to keep your credit score strong," said Rahul Jain of Edelweiss.

3] Fill Your Investment Loopholes: We generally tend to put our long-term investment goals on hold; till there is a considerable rise in salary or existing liabilities have been met. These can include long-term goals such as retirement, kids' education, investing in an asset and so on. When we receive a Diwali bonus, it is always recommended to create discipline and put some part of it to your long-term goals.

These lumpsum contributions can help to accelerate the achievement of the goals or meet any shortfalls. Remember, even though the initial savings amount may be small, over the longer term it can go a long way to bridge the loop-holes between the required amount and accumulated amount.

4] Tax Saving: It will be only a month or so when most employees will have to provide proof of tax savings to their employer. And those last-minute decisions for investments lead to dip into your savings that you have earmarked for other goals. If you are not able to do so then, tax cut from your salary in these months disturbs your monthly household expenses. A Diwali bonus can also be used for making tax-saving investments, to ensure you receive a better post-tax income in the coming months and keep your finances in manageable limits.

"Use the festive vibes of the Diwali to let go of all your worries and stress. Make the most of your time with your family but never let go of the rein on your finances. Always remember that these small changes in your investment outlook will ensure a prosperous life for you and your family in the long run," concluded Rahul Jain.

NOTE: Zee Business brings to you an exclusive line up of programming for Diwali 2019 with experts, insights & sharp acumen under Zee Business Damdar Diwali show. A Diwali treat for you! Starting soon from October 14 only on Zee Business.in.

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