arn nicely, spend wisely and you will live happily. - Auliq Ice
With the end of the financial year, this is a bonaza time for the employees. Some of you have received the annual bonus and some of you are waiting for an annual bonus. Have you thought of investing the annual bonus at right place How to make most of your annual bonus You can use the fund to gain enjoyment and happiness. Again, it is also indispensable to meet both the short and the long term financial goals. We will help you with 5 intelligent ideas to invest your hard earned money
Prepay your home loans
If want to save extra bucks in a long run, prepay your home loans debts.
While making out any prepayment, you need to consider the following things Decide if you want to close the entire outstanding loan or a trench of that. You can use your annual bonus to prepay a considerable amount of home loan.
Check with your lender if there is any charge for the prepayment of home loans or not. In the case of an individual, there are no charges for prepayment of home loans. However, in the case of a company, trust, society or firm, a nominal fee of 2-5% is applicable in this case.
Invest in Tax Savings Options
Choose from a plethora of tax savings options. An investment can be done in form of ELSS, NPS, ULIP, PPF & VPF, Sukanya Samriddhi Yojana, Sr. Citizens Saving Scheme, Bank FDS, Pension Plans and Insurance Policies and help you save tax. The tax savings investments can be claimed under Section 80C.
Buy Health Insurance or Mediclaim
Let take a case study
Mr. Prakash, a web designer in an outsourcing company, receives an annual bonus of Rs 30,000. On one hand, he wants to gift something valuable to his parents. And on another hand, he is looking for some tax savings investment. He has used the entire savings limit under Section 80C of the Income Tax Act. His friend advised him to purchase a health insurance plan for him and his parents.
He browses the internet and purchased two health insurance policies: one for his spouse and another for his parents with an annual premium of Rs 12,000 and Rs 18,000 respectively. The entire amount can be claimed under section 80D of the Income Tax Act.
One is eligible to avail a tax benefit under section 80D on paying the premium for medical insurance.
Pay your down payment
If you are plan to purchase a home, it is important to note that the lender can finance up to 70-90% of the property value. You need to arrange the rest amount as a down payment at your end. Most of the lenders turn down the home loan application in the case of unavailability of the down payment. Your annual bonus can help you pay down payment.
Clear off your credit card bills or outstanding personal loan amount
With an annual bonus in hand, you can wipe out your debts easily. Clear the outstanding bills; it will give you a relief and also enhance your CIBIL Score. Settling all debts, especially credit card debts, is like cutting through the mental clutter.
To conclude, an intelligent strategy and little secondary research save your tax & overall meet your financial goals. Happy Bonus!
Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.