"Idle" Money? 5 Ways of Using Your Appraisal for Further Benefits
As a healthy financial practice, you want to channelize this money in such a way that it gives you positive returns, helps in wealth creation, and keeps you financially secure. As any investment, you do not want this hard earned money to depreciate, but in fact want to see it grow and grow and grow. The five options listed below can help you immensely in multiplying your income.
Start a Mutual Fund SIP:
The easiest way to increase your investment is to start a systematic investment plan in a mutual fund. Mutual funds although may be subjected to market risks, but they provide an easy and safe investment opportunity which can become a long term investment as well if you choose to keep investing systematically later as well by investing a certain sum of money every month.
Increase your PF Contribution:
Salaried employees generally contribute 12% of their basic pay to the employee provident fund. However, you can increase this amount as per your convenience. If you are a conservative investor and want assured returns along with capital protection, you should opt for increasing your contribution to your PF whenever you get a raise in your salary.
Pre- Payment of Existing Loans:
If you have any EMIs going towards a personal loan, vehicle loan or home loan, it is advised that you use your increased salary and bonus to clear out the principle amount of your loan. This is advised as it helps to decrease the loan amount, helps to get rid of your liability sooner than the actual tenure of the loan, thereby reducing your interest outflow as well as your financial stress. However it is not advised to make pre payments if you are reaching towards the end of the tenure of the loan to avail maximum tax benefits.
Buy Insurance Cover:
Unlike your performance appraisal, life is unpredictable. Therefore it is best to buy an insurance cover that can help your family in case of your untimely demise. HDFC Life offers you a range of term insurance plans that provide you comprehensive protection at an affordable price and help you to protect yourself and your loved ones against the uncertainties that life may throw at you, and assist you in providing a steady source of income for your family when you are not there.
Look for Tax Saving Investments:
With the rise in your salary, your tax liabilities are sure to rise too. In case you are not able to make the best use of your tax saving capabilities, you can use your increase income to improve your tax saving investments. HDFC Life presents HDFC Life Sampoorn Nivesh- an insurance cum investment plan designed specifically with multiple fund options so as to help you optimize your investment. Furthermore, it also provides you with varied benefit options to meet your protection needs.
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"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
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