Got a Diwali bonus? Here’s find out how to put it to good use
You have most likely began making an inventory of issues to splurge your Diwali bonus on. But, earlier than you propose that extravagant vacation or purchase the brand new iPhone, take into consideration the various vital monetary duties you possibly can full with this additional money.
Mint lists out 3 ways in which you’ll be able to put your Diwali bonus to good use.
Pay off pricey loansPersonal loans include excessive rates of interest of 15-22%. The curiosity on bank card rollover steadiness is costlier at about 40% per 12 months. Financial specialists advise that any windfall, nonetheless small or huge, needs to be used to repay debt.
“As a rule of thumb, in case you are saving extra curiosity price by means of compensation than investing this quantity elsewhere, you need to actually repay your mortgage,” stated Raj Khosla, founder and MD, MyMoneyMantra.com.
Take notice that some lenders cost a prepayment payment on loans.
“Know that the curiosity saving can be larger within the earlier stage of the mortgage. Also the speed of prepayment penalty can differ in keeping with the mortgage tenure. Thus, it’s essential to contact your financial institution and successfully assess the entire saving versus price of prepayment,” stated Khosla.
Top-up emergency fundIf you needed to dip into your emergency corpus amid the various hardships that the previous 18 months have thrown up, a bonus is an effective alternative to refill it.
If you don’t have an emergency fund in any respect, monetary planners advise that you just use the complete bonus quantity to create a cushion that may cowl a minimum of six months’ price of your bills.
Fund necessities to keep away from new debtYou can use your bonus to purchase family merchandise corresponding to a washer or a fridge that you just completely want by paying upfront as a substitute of choosing the EMI route.
Loan choices like purchase now, pay later and no-cost EMIs have made purchasing handy, nonetheless they cost steep rates of interest of 15-25% per 12 months.
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