April 29, 2022
For 30-year old Sakshi, it was a dream come true. She finally received her well-deserved increment after two long and tedious years of the pandemic. But while she feels lucky to now earn more every month, she wonders how to spend the extra money to make her loved ones feel happy? What if she invested all her extra income and got a much higher return at the end of the year? Would that offer better financial freedom for her family?
If you’re also experiencing a dilemma like Sakshi, here are a few ways to invest your new salary hike and leverage your financial upper hand for a prosperous future.
If you’re a regular SIP investor, you can consider increasing your SIP amount by at least 50% of your raise. This will help you save more money, and your SIP will offer better results in the long term. For instance, if you make your payday your SIP day, you can spend what’s left after saving and investing. With SIP, you can accomplish your envisioned financial goals with disciplined and persistent investment.
For those who have outstanding loans, reducing your debt burden with your increment or an annual bonus can be a great solution. Utilize your bonus to prepay your loans – either partially or fully. This helps you save immensely on interest payments. Also, the money you save on the loan repayment can be invested for your future requirements.
Can’t decide if you should invest or spend the extra money you’re making every month? Invest 50% of your additional earnings – you can increase your EMI if you have a loan or set aside some amount for your expenses. When you think about closing loans, consider reducing the loan with the highest interest amount – it could be your car loan or a personal loan. This will help you save on interest in the long run and your loan will get over faster, too. Use the balance 50% of the hike to either upskill yourself with new courses, lessons or online programs or consider taking a trip with your loved ones to enjoy the fruit of your labour! Invest in yourself for more increments in the future!
With new income, you have an opportunity to create new financial goals and set aside more money for your dreams. Think of diversifying your portfolio with investments in gold, real estate, insurance, etc. You can create better retirement plans, fulfil your foreign vacation dreams or even set aside more money for your child’s education with a diversified portfolio. Also, you can create an emergency fund FD or debt investment to meet any emergency in your family.
Getting a raise or a bonus at work makes everyone happy. You’ve worked hard for this moment, and it’s natural to want to celebrate it in a big way! But remember not to go overboard with your spending and utilize the money for investments instead. At the same time, it’s crucial to know that keeping the money in your bank will just offer 2% or 2.5% p.a. as interest, making it essential to find the right opportunities to grow your wealth.
The right choices can help professionals like Sakshi secure finances and invest in the right avenues to smartly manage their wealth. How are you investing your increment this year?