Before you spend your bonus money on consumptive activities, you should look at your own financial conditions first. Do you have any debts you need to pay? Using your bonus money to pay debts may not sound appetizing, but it sure is important. Next, do you think you have sufficient investment for your age? If you believe you should add more to your investment portfolio, then bonus money can be an excellent starting point. Do you have enough money in your savings account to hedge against unforeseen difficulties in the future? Do you already have a health insurance policy? If your answer is no to the latest two questions, then perhaps the most prudent option is to save your bonus money or to purchase an insurance policy.
Recently some experts have been arguing that people should use their annual bonus money to pay off property mortgage or house installments. This suggestion appears to be very sensible at first, especially in a society like Singapore where home ownership is both a life milestone and a culturally sensitive matter. Furthermore, it is also true that using your bonus money to pay a mortgage will make a pretty big dent in your loan, much larger than your usual monthly installments. However, this suggestion deserves a closer look. Is it really such a good idea after all?
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