Many companies have finished their annual employee appraisal process. Based upon your overall performance, the company give you a hike in your annual income. You must use this additional money in a good manner. Don’t let your money sit idle in your bank account or waste in other expenses. If the money is invested in a good way, it can give you good returns and help to secure your future financially. So as a wise investor, you would not want your money wasted in expenses or other things. These 5 ways will help you to invest your money when you got an appraisal.
Start a Mutual Fund SIP:
You should invest your hiked money to start a SIP (Systematic Investment Plan). This is the best way of investing in Mutual Funds. You have to invest a fixed amount (minimum Rs. 500) on a regular interval. This will help you to create wealth in the long term by beating inflation. If you have already a SIP, you can increase the monthly invested amount. You can also opt for other schemes after consulting with your Financial Advisor(as PTIC INDIA – Financial Planner in Delhi).
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. This also helps you get the tax rebate under Income Tax Act Section 80C.
Pre-payment of your existing loans:
It is advisable to use this money to pre-payment of your pending EMIs of loans or monthly installments. This will help you to get rid of your liability sooner than the actual tenure of the loan. This will also help you to lower your financial stress. However, you should avoid pre-payments if you are nearing the completion of the loan tenure to avail maximum tax benefits on home loan principal and interest outgo.
Buy insurance coverage:
Since life is unpredictable, it is wise to have financial safety nets to protect your family against any untoward eventualities. It could be your untimely demise or sudden health issues which need to be addressed urgently. One should use the additional surplus as part of the premium payment to get a cover under term life insurance ensuring the financial health of your family in your absence. You can also utilize your extra income for buying comprehensive family health insurance policies.
Look for tax saving investments:
With the rise in salary, your tax liabilities too rise. In case you aren’t able to save to the full extent of the Rs. 1.5 lakh available to you under Section 80C, use your increased income to improve your tax-saving investments. This, on the one hand, helps you reduce your tax payout every financial year; and on the other, the investments thus made get you the much-needed growth in your investments. You can choose options like equity-linked saving schemes (ELSS) offered by mutual fund companies if your risk appetite is moderate. Conservative investors may go for Public Provident Fund (PPF) or National Saving Certificates (NSCs).
