Be wise: save back pay, bonus or increments

By Finbar Garcia LUTCF, FSS, MFA

Let’s talk back pay, bonus and increments. These aren’t gifts from the Three Wise Men, but you need to be wise with what you do with it.

While people may receive one or more of these well-deserved salary increases, adjustments and extra cash, hopefully in time for the season, it may be better left for the New Year.

Some will disagree with me but during this period of merriment, spending tends to take priority over savings. Christmas spending shouldn’t be budgeted from these expected or unexpected revenues but should have been planned for months ago.

Saving for the ‘rainy days’ is paramount, especially during these uncertain times, both locally and internationally. Where and how you save should be based on your goals.

Possible investments

Let me explain some of the possible investments and outcomes.

Stock Market Investments (Equity Market): This is an excellent area to invest for the long-term based on your goals but you need to be prepared to ride the waves as these market returns will fluctuate based on several internal and external factors.

Bond Market: This is another medium to long-term investment area you can look at. This market will give you some guaranteed returns, even at a minimal rate. You can hold the bonds until maturity or sell them before, based on the terms and conditions of the bond you purchase. The bond market could be as short as 12 months to as long as a few years. You must have a risk assessment done before purchase. At the end of the maturity of the bond, you will receive your investment plus interest in the bond.

Insurance Market: Some insurance products offer you the opportunity to invest additional monies into the policy or may even offer a straight savings policy. These investments are also considered long-term. The insurance companies usually invest in both the local equity and bond markets and international markets. This will remove the stress of your having to invest directly in these markets. These insurance products usually carry fees and charges, so again you need to look at the Returns vs Expenses, so you won’t lose money.

Fixed Deposits: This is an ideal market that allows you to enjoy the best of both worlds. A fixed deposit is usually a short-term investment, which gives you a guaranteed return and is backed by the Deposit Insurance Corporation, whereby your investment is insured up to a fixed amount per investment/per person.

While the returns may appear small, this is mainly because the investment company looks at the spread of their investments to offer the guaranteed rate. The only charge applicable will be a Break Rate based on your request to stop the investment before maturity. Simply put, in the year that you decide to stop the deposit, you will earn a minimal rate and not the rate that was initially offered for that year. Whatever you earned from the period prior is already yours. These deposits are based on Compound Interest system, where you can receive more than some other investments.

Understanding these should give you an idea on how to save some of the money you expect to receive.

Christmas will come, Christmas will go, but the opportunity to save may not always be there for you. Money spent is money gone, money saved is money earned.

So, until January, I would like to wish all, a happy and holy Christmas Season. May the joy and peace of Christ be with you and your family, bringing you comfort and hope for the New Year. Happy New Year, 2026.

Call me for more information on planning your financial future. Send your questions to myfinancialadvisor2020@gmail.com or call 620-1185.