Have you got a nice fat half yearly bonus? Has a good chunk of your investments matured?

What do you do with this money. Many times, people just splurge this money or invest it immediately to grow it further. However, both of these might not be the best use of your bonus money. Have a look at this checklist

Have you set up your emergency fund?

Emergency fund is something that should be available anytime you need. Typically you should have 6 months worth of expenses set as emergency fund. Your emergency fund can be in your savings account or in safe liquid debt funds. Though the purpose of emergency fund is not to give you extraordinary returns, debt funds are better as they give you much higher return than savings account with almost same level of liquidity.

Have you cleared your loans?

Do you have loan for which you are paying high interest? It is very rare that your savings will generate more risk-adjusted returns than the loan you have taken. Also consider the tax exemption on loans. Not all loans are bad and you do not need to clear all loans.

Have you done your insurances?

You should have term insurance if you have dependents. Check here why you need insurance and how much you need. Apart from term insurance, it is good to have your health insurance to protect you from unforeseen health conditions. If you own a car or a bike, insurance is mandatory so check if you have renewed your insurances.

Have you saved for your short term needs

Investments are always associated with risk and risk is higher when your investments are for short term. But if you are going to need money for your short term or medium term needs – like buying a car or buying a house – it is better to not invest in high risk products like equity. Save in liquid funds of short term debt funds for short term goals.

Have you done your tax saving?

There are multiple ways you can save your taxes under Section 80C. You can save sizeable amount by utilizing your Section 80C limits. Depending your time horizon and risk profile, you can invest in PPF or ELSS funds.

Lastly, do not invest in one shot. 

If you are done with all the points above – you should invest that money. However, if you are not an active investors it is better to deploy money in chunks rather than one shot. One way is to put money in liquid fund and then gradually invest in next few months depending on your comfort.

Happy investing!