March 13th, 2014

Bonus Headache



I got a bonus last year from my company but I want to maximize on this windfall. What should I do? Frivolous spending is not an option.

You are right not to blow it all on something frivolous that will not accrue any future financial benefits for you. While it is okay to treat yourself, your best bet would be to use the bulk of the money to improve your financial status. This would be the greatest benefit to you rather than succumbing to the temptation to buy that big screen television you always wanted.

At the Unit Trust, we encourage investment of any unexpected monies that may come your way, whether it is a tax return, medical claim or income from a second job. In particular, the receipt of a bonus can be significant enough to ease some financial constraints without having to tighten your belt.

So how do you decide what to do with it? Ask yourself, what are your financial priorities? Will the money be best utilized towards the purchase of a home? Or is starting a business venture a better idea? Should you supplement your emergency fund? Or maybe it’s time to start a retirement plan. Whatever your priority, the Unit Trust has an array of investment products to meet your needs that helps increase the value of your money.

If you want that bonus to kick start your house fund, the Growth and Income Fund (GIF) will be best suited for you. It is geared towards meeting your long term goals through capital growth and dividend income which can appreciate the value of your initial investment. If the value of a unit falls however, you are protected through the price guarantee provision.

To beef up your emergency fund or meet any short term goals, the TT$ and US$ Income Fund will be well suited for you.

If you want to secure your children’s financial future, the Unit Trust offers a suite of products to meet these needs. These include the Children’s Investment Starter Plan (CISP) and the Student Investment and Protection Plan (SIPP).

Our retirement products range from the Pension Plus which is a tax approved deferred annuity, therefore you get back 25% of any contributions made from the Board of Inland Revenue, an addition to your bonus for further investing. We also have the Individual Retirement Unit Account (IRUA) that comes under the GIF umbrella and the Universal Retirement Fund which is a retirement fund aimed at capital appreciation.

Tips on maximizing your bonus:

  • Reduce high interest debts

This is an opportunity to reduce your credit card debt which can rack up to 24% interest annually. The additional savings from doing this can go into interest earning investment options.

  • Monetize your skills

Invest in yourself by learning a new skill or advancing your education. Ultimately, you will be equipped to earn additional income as more opportunities are open to you.

  • Save for a rainy day

Unfortunate circumstances can happen at any time, from your car breaking down to falling ill. It is important to prepare for these eventualities which can be quite expensive.

Indeed the options to maximize this windfall are endless. Narrowing down on what to do with it will depend on your financial priorities and how soon you want to achieve them. Do not hesitate to contact any of our Financial Advisors for greater guidance on investing your bonus.