Shopping or investing - what do you choose this diwali?

After Navratri and Dussehra, the mood is setting for Diwali, the festival of lights. The aroma of delicious Diwali sweets and savouries is in the air, and street shops and malls are filling their inventory for Diwali shopping. It’s the time of the year when many of us look forward to changing our outfits or wardrobes, buying a fancy gadget, home appliance/s, a vehicle, doing up the house, and so on. All this surely is therapeutic and brings us joy. Striking a balance between spending and saving -- even if it is your Diwali bonus -- is imperative in the uncertain times we are living in. So, surely spend money on Diwali, but wisely and smartly.

Reasons why you should spend:

• Attractive offers on debit/credit cards: Using a credit card or debit card, you can take advantage of the various offers offered by the banks, especially the ones that are offered during the festival season. Axis bank offers exciting Diwali offers at various stores, malls as well as online portals on a variety of brands, plus on movie tickets, travel, and dining. Availing of them may help you save a good deal of money.
• Earning reward points: When you shop using a debit card or credit card instead of opting for cash payments, banks credit reward points to your account which can later be used to shop with partner stores/brands for items such as air tickets, restaurants, clothing etc.
• Avail discounts and deals: Certain brands offer additional discounts and deals if you pay using a particular bank’s credit/debit card which acts as a huge money saver, especially during the festive season when most people shop in bulk and the urge to shop is more.
• Avail EMI options: The festive season is also ideal to buy high-value or premium goods since a lot of banks offer easy EMI options on transactions where you use a debit/credit card.

However, that being said, it is advised that you always spend your money wisely and only after considering your financial standing. Along with fulfilling your materialistic needs, you should also think about investing your Diwali bonus sensibly. Given the uncertainty that surrounds us today, it would be worthwhile striking a balance between spending and making productive investments rather than overindulging in retail therapy. This can help you secure and illuminate your financial future.

[Also Read: Five financial lessons to learn from Lord Ganesha]

Reasons why you should invest:

• Meet short to medium-term financial goals: There are a plethora of short-term investments options you can choose from that will help you meet your short-term financial goals such as going on vacations, buying high-value goods, gadgets, etc. Debt Mutual Funds such as ultra-short duration funds and liquid funds are examples of investment options that are dedicated to grow your money in a short span of time. Similarly, Fixed Deposits are one of the most popular avenues for earning fixed, steady and secure returns for your medium-term financial goals.
• Meet long-term financial goals: Sensible investments can also help you meet your long-term financial goals or obligations such as expenditures on higher education, marriage, buying property, vehicle etc. Investing in Mutual Funds using SIP is one of the best proven ways to earn high returns using the power compounding in your favour.
• Emergency situations: Investing can also help you prepare for emergency situations. Emergency funds or rainy-day funds are a smart and sensible way of ensuring that you do not fall into a debt trap or prematurely liquidate your investments in a time of urgency.

Here are a few investment avenues you may consider:

1. Gold - On the auspicious muhurat of Dhanteras or Dhanatrayodash (the first day of Diwali), while you may consider buying gold jewellery, it would be far more prudent to own gold the smart way, i.e. in the form of Gold ETFs, Gold Saving Funds, and/or  Sovereign Gold Bonds.

2. Bank Fixed Deposit - Deploy a portion of your Diwali bonus or cash gift in a bank Fixed Deposit (FD). To know how much returns your investment in a bank FD will earn, use Axis Bank’s FD calculator. If you follow a sensible approach, investing in bank FD can be a rewarding experience. So, book your bank FD this Diwali.

3. Mutual Funds - Invest a portion of your Diwali bonus in the best mutual fund schemes after holistically evaluating the quantitative and qualitative parameters. Alternatively, you could also take the SIP route to make regular systematic investments in your chosen most-suited schemes. Want to know how much should be your SIP to achieve an envisioned financial goal? Use Axis Bank’s SIP calculator. Pick the best mutual funds schemes in five minutes online!

This Diwali, along with the joy of shopping for things you need, brighten up your financial future by making wise investments. Spend and invest wisely!

Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision