Think Different: Invest your Diwali bonus in an SIP this year

Diwali is just a few days away. All of us eagerly wait for this festival of light as it provides us with a chance to dress up in beautiful attire, relish different sweets, meet friends and family and shower them with wishes and gifts.

But there’s one more thing that many of us look forward to during this festival season and that is the Diwali Bonus. We are quite sure that many of you would have already thought about what to do with it. If you are planning to spend it on discretionary items, then hold on! Spending on such items may provide immediate gratification but there is much more that can be done if you invest your bonus appropriately.

Systematic Investment Plan (SIP) of mutual funds is one such avenue that gives an opportunity to earn good returns for both active and passive investors. 

You can either choose to invest monthly beginning with an amount as low as Rs 500 or if you just want to invest only your bonus money in SIP then go for an annual term. The returns are almost similar in both the cases.

For example, if your company is giving you a bonus of Rs 12000 on Diwali. You can invest this money in SIP for a period of 5 years, 10 years or even longer than that. Usually, you will earn 12-15 percent  on an average when you invest in an SIP, the maximum going upto 22-25 percent. 

Let’s just go on with an average interest rate. In case you invest Rs 12000 every year under an SIP plan in mutual funds, at 12 percent annual interest rate for 10 years, your total investment would be Rs 1,20,000 and the amount you would be receiving at the end of the tenure is Rs 2,35,855, which means you are making a profit of Rs 1,15,855.

Isn’t it a good deal? So, just think once before spending your bonus. Moreover, the icing on the cake is a tax exemption benefit of Rs 1.5 lakh under section 80C of the Income tax, available under SIP.