5 Tips to Start Investing your Bonus
December is the time of year in United States when employees receive a little more money than usual in the form of annual bonus. However many individuals consider this as a spending opportunity.
But before you spend it all, you should set aside a a fixed part of it to start investing. And if you don’t know how to start, here are the five tips to make use of bonus efficiently:
1) Create a budget
Yes, we know that this is the most common advice anyone will give. But practically speaking, nothing can be done if budget is not in place. So, yes, make a specific budget for your bonus.
While planning make sure that you set aside 10% or 15% or even more to invest. It doesn’t matter if the amount is big or small, do it.
2) Define your profile as an investor
No one who knows you better than yourself. Take advantage of that and define whether you are aggressive, moderate or conservative in relation to the risk you are willing to accept.
This is very important, because it depends on your profile what kind of products you should look for. Just remember that all investments involve risk. So don’t fall into the trap of an investment product which has no risk.
3) Choose a right investment product
If you do some research, you will see that there are many products in which you can invest and, thanks to fintech, you can do so with small amounts and perfectly diversify your money.
Before you start, make sure you understand correctly how the product works and its risks, that will help you make good decisions.
Once you have completed the above three steps, there is nothing to stop you from starting. So just do it and trust your decisions.
Don’t forget that the art of investing is in compound interest. So reinvest your earnings, which will help you earn even more and reach your goal faster.
5) Don’t stop
The hard part, always, is getting started and you’ve already done that. So keep going. To do this, you should only spend 10 or 15 percent of your overall income on investment and not stop until you have reached your goal.
Keep in mind that you must diversify as much as possible. So always look for new products or companies that allow you to do so. And if one of your investments doesn’t turn out as you expected, don’t be disappointed, learn from your mistakes and keep going.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.