Smart Ways to Utilize Your Diwali Bonus

The festival season is here! It is that time of the year when many of us receive a Diwali Bonus from our workplaces and money as gifts from our family members, which is typically spent on buying sweets or crackers. So, instead of spending the entire bonus on such things, there are various investment opportunities you can go for this festive season.

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How to Invest Money Saved on Crackers this Diwali?

Here are some of the smart investment options that may be suitable for all investors to start their financial planning on a go. Using these options, you can descend the large value for the well-earned amount of bonus, and at the same time gift yourself for all the hard work put in during this time. Let’s discuss in detail:

Start Investing to Fulfill Your Goals

Warren Buffett always believed in ‘Pay Yourself First’.

This sounds easy, but deciding on the investment option and how much to invest still is the main task to focus on. If you have not invested before, invest this year to give yourself an auspicious start. To make it simple, divide your goals into long-term or short-term goals. Then decide the amount to be invested. An ideal target amount should be 30 to 40 percent of your bonus amount that you get on Diwali or thinking to spend on crackers.

The short-term objectives may involve a vacation to a foreign country, down payments to buy a house in 1 to 3 years, or buying your dream car. For these short tenure goals, debt funds are the right plans as they offer liquidity and are not exposed to market movements, thus giving stable returns. Investing in debt funds for a short duration will help you reach your objective steadily, as compared to a savings account.

In long-term goals such as retirement, education of children, etc., you can invest in a differentiated equity portfolio. Equity mutual funds provide you with good returns and are the right wealth creation tools.
Improve Your Existing Investment

One of the best utilization of your Diwali Bonus is to improve your current investments. For example, if you have SIP for your long-term objective, you can top up the money. Let’s say if you have a SIP of 10k per month. This will help you reach your goals faster and boost your investments.
Invest in IPO

IPO i.e. Initial Public Offering is the stocks offered by private organizations to investors for making them public and then list their stocks on exchanges. IPOs, these days, is becoming a very amazing market opportunity for retail investors, but you should always choose IPOs after appropriate research. Investors can purchase 1 lot of IPO stocks for approximately Rs 14,000. Till now, 64 IPOs have been registered on the BSE in the year 2021 with most of them operating with good returns on the day of listing.
Buy Gold

As we all know buying gold is common in Dhanteras. Its demand has risen with the increasing prices during Diwali Week. Wedding and the festive season are on the go, so the call for gold has got a boost. Meanwhile, one can also purchase digital gold and avoid control over physical gold using various investment platforms such as Paytm, Google Pay, and more.
Give Yourself the Gift of Insurance

With increasing unpredictability in life, having insurance these days is a necessity as it protects your expenditures during critical times. If you have not purchased an insurance policy for yourself yet, now is the time to buy. Life insurance offers financial coverage for an eventuality associated with human life such as disability, death, retirement, accident, etc. In the meantime, a general insurance provider offers insurance plans to secure travel, health, motor, and home. It is very important to have insurance as it provides financial security in case of an unfortunate event.
Invest in PPF

PPF, Public Provident Fund is one of the safest options to invest in. It can help you secure your retirement. The minimum tenure of PPF is 15 years with an investment of as little as Rs.500 to open an account. You are allowed to open a PPF account in the post office or on any nationalized bank. Additionally, Income Tax benefits are also valid on the principal amount that is invested in a PPF account. The rate of interest for PPF is fixed and is paid by the Government for every quarter. Presently, you get a 7.1% interest rate on PPF, which is more than the interest rate on a savings bank account.
Pay off Your Existing Loans

Another smart way to utilize your Diwali bonus is to pay off your existing loans. Arrange your loans as per the rate of interest they are attracting. For example, the debt on a credit card accrues a high rate of interest, so you must pay it off first from your bonus amount. Additionally, you may move on to pay off your other loans with relatively lower interest rates, fully or partially, as per your convenience. It improves your creditworthiness and enables you to invest and save more in turn.

Wrapping It Up!

Steve Jobs rightly said - ‘Dots Will Somehow Connect in Future’. In this case, small investments of today can create a huge corpus for you tomorrow. Utilizing your Diwali bonus in any of the aforementioned ways and effectively fulfill your long or short-term goals. Make your bonus count by selecting the right gift for your loved ones and yourself. Let this time of the festival of lights guide you to make the right decision.

Choose Wisely and Invest Smartly. Happy Diwali!

˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-07-2025

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).

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