Once again, the festive season is here; a time for making long shopping lists, splurging on those things we have been eyeing furtively all year long, partying, and visiting loved ones.
In the spirit of the season, a lot of companies reward their employees by giving them Christmas bonuses. It is very tempting to blow one’s bonus extravagantly only to become broke throughout January, till the next paycheck.
You could decide to do better this year and be more prudent with the extra cash. This article would explore alternatives for investing in your Christmas bonus.
Treasury Bills: Treasury Bills (T-bills) are the safest investment in Nigeria today. With rates hovering between 13-17% for the 91, 182 and 364 days tenors, it will offer a decent return on your investment.
In addition, T-bills are highly liquid and can be easily converted to cash if you need money urgently; this can be done through the Over-the-Counter Market (OTC). The price at which you decide to sell will depend on the forces of demand and supply.
Even though in March 2017, the FG increased the minimum amount of money that could be invested in T-bills from N10,000 to N50m, you can still invest even if you do not have N50m. This is because banks can pool sums of money from customers into a portfolio that would be at least more than the minimum required N50 million.
All you have to do is walk into your bank and pick up a form for the purchase. You will fill out the form including your personal information, the amount you will want the bank to deduct from your account, and your desired tenor. Some banks also accept letters of instruction to bid on your behalf.
FGN Savings Bond: The Debt Management Office (DMO), on behalf of the federal government introduced the savings bond to help enhance the savings culture among Nigerians as well as returns on investment. The FGN savings bond, just like the Treasury bills, is safe with no risk because it is backed by the full faith and credit of the Federal Government of Nigeria.
You can invest with as little as N5,000 and as much as N50m, with tenors ranging from 2-3 years.
A major benefit of investing in this type of bond when compared to T-bills is that you will receive interest on your investment every quarter which will be paid to your bank account. This can be used to fund your expenses as they come. Also, the income earned from it is exempted from taxes.
You can buy FGN Savings Bond from approved registered distribution agents/ stockbrokers.
Mutual Funds: A mutual fund is an entity that pools cash from a variety of investors for the sole purpose of investing the cash in stocks, bonds, treasury bills etc. Investing in mutual funds is a good way to diversify your investments and help minimize risks.
There are different categories of mutual funds: fixed-income, equity funds and fixed-income funds. Your decision to invest in any of these will depend on your risk appetite and needs because these funds have different objectives and strategies.
Insurance: Nobody wishes for bad things to happen, but in life, the unforeseen will always occur. It is better to be prepared. One way to be ready is to have an insurance policy.
You do not have to buy every type of insurance policy out there, however, a policy like Home Insurance is an important investment you can make. A home insurance policy will protect you financially if your home and property get damaged by perils such as fire, theft, flood, etc.
If you have kids, buying an Education Policy will be a wise move because you will be ensuring a financial future for them by providing quality education when they come of age.
Invest in yourself: Enrol for a course – websites like Udemy, Coursera, EDX, and Khan Academy offer thousands of online courses and some degrees.
Invest in good books.
Start a small business.
Get a gym membership.
Family & Friends: Before you had a job, some people were there for and believed in you. It is a season of giving. Nothing is more rewarding than blessing others with your money.
You could try any of these options and reap benefits from your Christmas bonus this year.