How to make the most of your bonus
Spend it or save it? How to get more from your financial reward from work.
2 min read
In the first of a series of articles about ‘windfalls’, and the competing emotions involved in deciding how to use them, we look at rewards from work.
You’ve worked hard and received extra money from your business through a bonus, profit distribution or dividend. Your first thought is probably to treat yourself – you only live once after all.
But the sense of sheer excitement at making that long-awaited dream purchase can soon give way to more practical thinking. Shouldn’t you put at least some of it away for a rainy day?
Coutts Private Banker Dennis Howard says, “I work with all my clients to understand their needs and objectives over the short, medium and long term, and together we come up with a financial plan for the future. When a lump sum comes along their thinking understandably turns to an emotional purchase like a second home or classic car, but it could also pay to save and invest some of the money.
“Making some wise decisions now could benefit you and your family for years to come.”
Here are three possible ways to help make the most of that well-earned work reward.
1. Be efficient – get the basics right
First things first – be as efficient as you can with your wealth. Think about the following:
- Your ISA allowance – this year you can invest up to £20,000 in an ISA and any money you make is protected from UK Income Tax and Capital Gains Tax. At Coutts you can do it with a stocks and shares ISA at the touch of a button through our online service Coutts Invest – eligibility criteria apply. If you use that service to invest £20,000 or more by 6 June, through an ISA or otherwise, you’ll get a gift through our Thank You from Coutts loyalty programme.
- Your pension – if you’re not making pension contributions up to your annual allowance, you could consider topping up. Investing through a pension is generally recognised as a highly tax-efficient way to save for later life. It’s worth remembering though that exceeding your annual allowance could incur a tax charge.
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