Invest and Spend this Festive Season

October and the months that follow are considered to be special in India because it marks the festive season. The festive season continues till we welcome the New Year. We just witnessed the phenomenon of Dusshera and reinstated our faith that good always wins over evil. You may feel like it is time to make some changes in your life. Do not ignore this feeling. Rather, review your financial life. The holiday season does leave you with ample time to sit back and review. During such exciting times, it is awful to have a budget which does not allow you splurge when everyone else around you is having a gala time. There could be a number of reasons why you cannot splurge. The bonus ran out too fast. The company you work in does not pay bonus or you are an entrepreneur still waiting for the breakeven point. In any of these cases, you know your pockets are not too deep.

This is time when someone needs to point out that you are relying on your first source of income which is the income that you generate from your employment. You simply plan to bridge the rest of the expenses by creating credit payments. These payments are going to take a substantial part of your future income as they involve interest payments as well. The second source of income is your investments. You have crossed out this thought because your investments are for your future needs or you have kept them aside for some specific purpose or you simply do not believe they can also be a source of income. Here is how your investments will also be your income this festive season.

Liquid Funds Could be for Easy Liquidity

Liquid funds are useful for investments for a short period of time. They are Debt Mutual Funds that invest in short term money markets instruments like Government Bills and Treasury Bonds with residual maturity period of upto 91 days. These are low risk products and are not traded in the stock markets. This festive season these funds could be your income generators. Instead of relying on your bonus, invest the bonus in liquid funds or surplus money that you may have been saving up for this purpose. These types of short term investments give your purchasing power a little boost. Most of these funds do not have exit loads and the amount withdrawn is credited in your bank account the following day. You can also opt for systematic withdrawals which is similar to how you withdraw money from an ATM.

Liquid funds are often compared with Savings Account. Bank savings accounts could give returns ranging from 4%-6%. Liquid funds are known to give annual returns as high as between 7%-9% with easy liquidity. Give this option a chance and give your income a boost this festive season.

Ultra Short term Fund for your Short Investments

Most of your investments for the festivities are going to be less than six months. Hence, Ultra Short Term funds are also an option you should seriously consider. They are also Debt Mutual Funds that invest in short term money markets instruments like Government Bills and Treasury Bonds with residual maturity period of above 91 days. These funds carry little higher risk than the Liquid funds and returns are influenced by market fluctuations. However, they also generate higher returns. You can also invest for a slightly longer period such as nine months. The instruments traded through the Ultra Short Term funds are also traded in the stock markets. This makes this fund volatile and comparatively higher in returns.

If you are an investor who has a little risk taking appetite and wish to add to your purchasing power, this could be an option for you to explore. Once you witness satisfactory returns you may also exercise the option of staying invested for a longer period, say up to nine months. A little surplus during festivities and holidays never hurt anyone.

Review Your Financial Priorities

We all make financial plans with certain goals and agendas in mind which needs to be fulfilled. There are some priorities or agendas which scrape the bottom of your list. Like the foreign holiday you planned which is one of your last priorities as compared to the retirement planning or the foreign education fund. Hence, you can perhaps borrow from such a fund which will not adversely affect your financial future but supplement present income.

What makes you think you cannot have a separate fund for your festivities? The idea might sound funny. But an expense planned beforehand always eases the execution of it. Hence, this year onwards you can start a Mutual Fund investment in Liquid or Short Term Funds solely for the purpose of your festivities expenses or miscellaneous expenses. It does not have to be big sum or lump sum. It could be your pocket money, surplus money or a part of the saved money or even the money which is lying unused in your savings bank account. Remember, little amounts can be turned into big amounts with the help of compounding.

Track Your Spending

If you have already started laughing because what I have said is so obvious that is funny, then I do not blame you. Perhaps I would have done the same. However, you will accept it when I point out that we do not know the price of half the things we purchase. This becomes a necessity especially when you are purchasing for festivities. We tend to get spirited and carried away. The little purchases become big amounts and we have blown a big part of the budget on useless things. Hence, track the spending. During Diwali you may not need fancy oil lamps for the entire house, only a few will do. Ordinary clay lamps look equally beautiful and are easy on the pocket. So it does not hurt to exercise the option and save a little while ensuring your house is lit as well.

Another arena where you can track your spending is gifts. Nothing comes cheap and especially not the burden of people’s expectations. So if you do not have a gifting tradition, do not start any or stick to personalized handmade gifts or small tokens of appreciations which fulfils the purpose and spares you financially. If such traditions already exist, then go for handmade personalized gifts which are easy to make and look beautiful along with the usual gifts. Having a mix of both will definitely let you off with a lighter budget.

Conclusion

Just the way small purchases piled up make a big expense, small savings piled up also make a big amount. As the investor and spender you have to decide which side of the earning spectrum you want to be. Do you wish to be on the giving end or the receiving end? Everybody should have a great time during the festivities and finances should be the last thing gnawing at your mind. If you do not want to be bothered at the peak of your enjoyment, then maybe you should bother now. A little planning, little savings and some well thought out investments could do the magic. Let there be light and jingle of the bells.