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"Idle" Money? 5 Ways of Using Your Appraisal for Further Benefits

November 05, 2018 1577
You and the company have had a great year financially, your boss calls you in for your performance appraisal and you know that everything is going great for you. You will be getting a salary hike as well as a performance bonus. With all this positivity, another thought goes through your head, the performance bonus - another large sum of money - What to do with it? You know you have to use it in a much more productive manner than letting it sit idle in your bank account. You might not wish to splurge it on any extravagant shopping spree or dinner either.

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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HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.

Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Email: [email protected], Tel No: 1800-266-9777 (10 am to 7 pm). The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited (“HDFC Limited”) and is used by HDFC Life under an agreement entered into with HDFC Limited.

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