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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. 
  • 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.

Find out more about Coutts Invest and how we can help you with your pension.

“Making some wise decisions now could benefit you and your family for years to come.”
Dennis Howard, Private Banker
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2. Be emotional – put it towards that dream purchase

Whether it’s a brand new, state-of-the-art kitchen or a holiday home in the sun, your money could make money and make your dream a reality. There are two key ways to do this:

  • Invest – investing can be a powerful way to put your money to work. The value of investments can go down as well as up of course, and you may not recover the amount you initially put in, but it could be very beneficial and help you realise your long-term goals.
  • Borrow – planning on making a big purchase? If you’re considering using your extra money as a deposit and taking out a loan or mortgage to pay the rest, Coutts has a number of flexible lending solutions to help you achieve your ambitions sooner. Also, when appropriate, we can take your bonus into consideration as part of your annual income when you apply for a loan or mortgage with us.

Find out more about investing and lending at Coutts.

3. Be kind – think about philanthropy

You might want to consider putting the extra money to work for the causes or communities you care about. Whether making a large donation to a good cause or setting up your own charitable foundation, the Coutts Institute can help you make a difference.

Find out how Coutts can help.

If you want to know more about how Coutts can support you with any of the above, speak to your private banker or call Coutts 24 on 020 7957 2424.

Next month – what to do with a lottery win.

The value of investments, and the income from them, can go down as well as up and you may not recover the amount of your original investment. The information provided in this article is based on our understanding of the laws and regulations as at the date of publication but it is not exhaustive and does not constitute legal or tax advice.

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With unstinting focus on client objectives and capital preservation, Coutts Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management. Our investment process is as disciplined as it is creative – ensuring tailored solutions with robust results.

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