There is hardly anything more enjoyable for a hardworking professional than the appraisal time and the bonus that it brings. Certainly, you have already received your year-end bonus or are awaiting it. Now, it is the right time to plan how you are going to utilize this bonus. There is a tendency among people to use the money to travel and buy luxurious things. Apart from these, you might also feel like spending it on entertainment. You deserve all of these and more, as you have worked with dedication to earn this bonus. However, you can also consider using the bonus more responsibly. You can use the money to invest or pay off some of your debts. The bonus can help you build a financially secure future and plan your fiscal goals. There are plenty of ways to execute that plan as explained ahead.
Prepay your home loan
One of the biggest liabilities you may have in your life is the home loan you have taken to buy your house. It takes a long time to repay the home loan, as it is a long-term financial commitment. You are not only accountable to pay back the loan amount, but also the interest on it. This interest piles up to become quite a lump sum in the long run. To avoid this, you can prepay the loan at any time, and using your year-end bonus to do so makes it easier.
Before you prepay the home loan, there are a few things that you need to consider. Firstly, you have to decide whether you want to repay the entire loan or a portion of it. You can make that decision based on the amount of bonus you have received and your other monetary goals. Another thing that you must consider is the prepayment fees. Some lenders charge you additionally if you decide to repay a chunk of your home loan at once. You need to enquire about your lender’s policy regarding this.
Invest in tax-saving products
One of the smartest ways to use your well-earned bonus is to invest them in products that offer tax- saving options. You can select from various tax-saving options based on your needs. Investing in the right products will ensure that you not only save on taxes but also build your wealth effectively.
Here are some tax-saving investing tips to consider:
Under section 80D, you can claim tax deduction up to INR 25,000 when you buy health insurance. Senior citizens can avail a deduction up to INR 50,000
Under Section 80EE, you can claim a tax deduction on the interest paid towards your home loan. The deductible limit is INR 50,000
Under section 80C of the Income Tax Act, 1961, you can invest up to INR 1.5 lakh to avail of tax exemption. The investment products that offer this option are bank fixed deposit for minimum five years, Public Provident Fund (PPF), National Pension System (NPS), and National Savings Certificate (NSC)
Purchase health insurance
One of your most important duties as a responsible family member is to make sure that your loved ones are safe and financially secure. If you want to use the bonus to gift your parents or spouse something, you may consider buying them a health insurance policy. The health cover will make sure that they receive the best medical care possible when needed without having to empty their or your savings. As a bonus, a health insurance policy also offers tax-saving benefits.
Under section 80D of the Income Tax Act, 1961, the premium paid towards the health cover is tax-deductible. If the insured person is under the age of 60, you can claim a deduction of up to INR 25,000. For an insured person over the age of 60, the deduction limit is INR 50,000. So, if you buy health insurance policies for your senior citizen mother and your spouse, you can avail of a total deduction of up to INR 75,000.
Paying down payment for a new home
Everyone at some point in their life dreams about buying their own house, and you are no different. Undoubtedly, you have a big ambition to own a home where you and your loved ones can live a healthy and happy life. Luckily, many lenders offer home loans with competitive deals on the equated monthly installment (EMI). You can finance the new house from the loan and repay it over a long period. However, you must be aware that your lender will only finance a certain percentage of the price. You need to pay the down payment from your personal resources. Often, the loan application is rejected if you do not have the money for the down payment.
The appraisal bonus can solve this problem easily. You can use the money to pay the advance to your builder and apply for a home loan for the rest. With the bonus money, your dreams of owning a home can now become a reality.
Repay credit card bills
The yearly bonus can prove to be a boon if you avail of its benefits in a wise and calculative manner. One of the smartest ideas to use the bonus is to settle your debts first. To start with, take care of your credit card bills. The credit card debt can pile up to become quite a huge liability. However, usually, the bonus amount is enough to cover such a debt. Once your credit card debts are paid off, your credit score will improve rapidly.
The interest rate charged on credit cards is much higher than the interest charged on personal loans. Therefore, in order to pay off your credit card bills, you can also consider availing a personal loan. Personal loans available at Finserv MARKETS have competitive interest rates, flexible repayment option, less processing fees and no hidden charges. You can avail a personal loan at Finserv MARKETS easily through a hassle-free online application process. Instant approval and quick disbursal of the loan amount are some of the added advantages of availing a personal loan at Finserv MARKETS.
Now that you know how to invest appraisal money, it is time to plan your finances around it. Figure out what is more important to you, and use the money to serve that purpose. The future of your financial security is completely in your own hands.
Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.