If you have no ‘bad’ debt, and already have a solid cushion of emergency savings, the next thing to consider when deciding between saving or investing your bonus payout is your financial goals. Without financial goals, you’ll be like a rudderless ship — no matter how powerful the engine, it will just mill about the ocean with no clear destination.
Divide your financial goals broadly into short-term, medium-term, and long-term goals. For example, a short-term financial goal could be having one year of living expenses in emergency savings, a medium-term financial goal could be financing your children’s higher education, and a long-term financial goal could be funding a comfortable retirement.
Now, determine which goal is your highest priority. Then, see which one would be best served by either saving or investing your annual bonus payout. For instance, your top priority may be saving for a property down payment within the next couple of years so the question is – is it better to save or invest to hit that goal? In general, short-term goals tend toward saving, while longer-term goals tend toward investing. This is because investing is usually not very liquid, requiring lengthy lock-up periods, which makes them less appropriate for shorter-term goals. On the flip side, however, the lower returns from savings can make shorter-term targets harder to achieve. LU Global’s investment app sets out to overcome this constraint. Our lock-up periods for our fixed term investment products start as low as 3 months, and many of our longer-term investment products also have early redemption options, making them suitable to help achieve both shorter-term and longer-term goals. On top of that, our investment app charges $0 subscription fees for all fixed term products while some of our flexible term products which are traded daily, charge a flat fixed fee of US$25 per trade transaction (versus up to 3 – 5% market rates elsewhere). There’s also additional flexibility through our new secondary market, MarketPlace, which allows the LU Global investor community to buy and sell their existing portfolio holdings before maturity, for various liquidity-driven situations.
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