It’s bonus season! Should you be investing a part of your bonus?

With the year-end approaching, some employers may be giving out bonuses to employees as a token of appreciation for their contributions to the company’s growth. These bonuses are additional incentives to the base salary that employees receive monthly. 

Receiving bonuses is exciting as the surplus increases your spending power for luxuries on top of the basic expenditures. What’s more, with the shopping season coming along in view of Christmas, you may be tempted to check off your wishlist and spend on your loved ones.

Aside from shopping, you may also wonder if you should allocate a part of the bonus for investing. 

If your answer to this question is “yes”, there are a few considerations before you start investing.

First and foremost, you need to keep your expenditures in check. If you are planning to shop, you can start by listing down the items you want to purchase. You can always revise this list to narrow down the list to only include necessary items. 

Bear in mind, it is important to set a budget for them and adhere to it so that you can stay on track and avoid overspending your overall budget.

The next important aspect is to look into your debts especially if you are owing high amounts of it. This is because such debts can be holding you from expanding your investment options. If you have any lingering car loans, home loans, credit card loans, or any other debts with astronomical interest rates, you should look into paying them off first. 

Now that you have sorted these things, it’s time to look into your choice of investments. While you can always consider traditional investments such as stocks or purchasing precious metals, one alternative is peer-to-peer (P2P) lending. 

P2P lending provides a wide choice of investment plans with varying tenure with stable returns free from market volatility. Individual investors like yourself can utilise this platform to directly match with creditworthy borrowers looking into getting funds at a more competitive interest rate. In return, you will be repaid based on the return rates. Rest assured these P2P platforms have carried out risk mitigation assessments by having borrowers’ profiles screened based on their credit history to reduce the risk of defaulting on loans.