It’s the time of the year again when your bosses are handing out your year-end bonuses. While you might be tempted to compare your bonuses with that of your peers, it’s good to remember that it is not how much you get, but what you do with it that counts.
For all you might know, you might be the last person who is the holding on to your bonus if you have colleagues that recklessly spend it on that pair of branded handbag or that expensive pair of heels that would fade into the oblivion one year from now.
Here are 5 intelligent things you can do to with your bonus to ensure that you not only hang on to it, but in some instances, multiply it!
1) Save It In Your Bank
Well there’s obviously nothing original about this option, but if you’re one of those who are getting pro-rated bonuses that don’t amount to much, this might be the most enlightened path to take. Still… a dollar saved is a dollar earned!
Did you know: You can earn 1.05% interest per annum on your bonus just by crediting your salary into OCBC’s 360 deposit account? That’s 21x better than the meager 0.05% interest you normally get!
It can potentially go up to 3.05% if you pay any 3 bills and spend $400 on your OCBC credit card. Even if you don’t want to go through all that hassle, 1.05% is still a pretty good deal for doing absolutely nothing!
2) Buy An ETF That Pays You Monthly Dividends
I recently started putting $200 every month into Nikko AM’s Singapore STI ETF via POSB Invest-Saver.
3 months later, the $600 that I’ve accumulated is already paying me $2.62 every month. And this payout amount will continue to increase as my savings continue to accumulate every month.
Imagine if I had put in a $6000 bonus into my ETF… I would be getting close to $26 every month! That’s an extra $312 a year, not to forget about the potential capital gains that you can make on the amount itself!
The FTSE Straits Time Index has already increased 5.29% over the one year period at the time of writing this article. And so if you had invested your money into the STI ETF during the period, you would have thrashed the returns you’ve got if you had placed your money in the bank!
3) Chuck It Into An Endowment Plan
If you know that’s you need to save for but don’t trust yourself to keep it untouched in the bank, perhaps this might be the best option for you.
Even though people always complain about the restrictiveness of an endowment plan, this can also be seen as a form of “forced savings”. Without such systems like these in place, I’m not sure if we are disciplined enough to keep our bonuses intact.
Besides, endowment plans these days are actually quite flexible. There are some plans which allow you to take out a fixed amount every year for a holiday while saving the remainder inside. Now that’s what I call a sustainable holiday saving plan!
4) Invest In Your Education
No, I’m not asking you to take on a part time degree or some sorts. Go learn something that’s actually financially useful and will either help to increase your salary or bring in some extra side income!
There are tons of courses out there that will teach you how to do that! You can learn how to set up your own internet business from your home, discover how to trade Forex profitably or even find out how to invest successfully like Warren Buffett!
5) Invest In Stocks
I’m sure you know that the most intelligent way to really grow your bonus is to invest it. The people my age always complain about not being able to retire early because they don’t have enough money to invest.
However, what do most of these people do when they actually get their bonus? They spend it.
Of course, I’m not telling you to throw money blindly into that blue chip stock. Investments can make you money, if you are first willing to learn how to invest wisely (#4).
Alternatively, if you’re not confident of beating the market, just follow the market and invest in ETFs (#2)!
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