Smart Ways To Make The Most Of Your SG Bonus This Year

Until the end of December, 2.8 million Singaporeans will receive their SG Bonus benefit. These bonuses are available to Singaporean citizens that are at least 21 years old and range from S$100 to S$300 based on recipients’ 2017 annual income. 

Some recipients may already know exactly how they want to use this money; however, others will have an interesting chance to put these funds to good use. Here are some clever ways to make the most of your SG Bonus this year:

Pay Down Your Credit Card Debt

For those with any amount of personal debt, it may be be prudent to immediately use their SG Bonus in order to pay down these loans. This is an especially good idea for those that have credit card debt because credit card companies tend to charge some of the highest annual interest rates of about 25 per cent.

For example, even an unpaid balance of S$100 to S$300 can quickly result in hundreds of dollars of interest charges if left alone.

Therefore, borrowers that only make the minimum payment on their credit card bill could have much to gain by paying down their current credit card debt with their SG Bonus.

If you still have a sizeable unpaid balance left after doing so, you may want to consider a debt consolidation plan in order to get your finances in order. These loans typically charge much lower interest rates than credit cards and other loans, making them a useful way for borrowers to consolidate and repay their existing personal loans.

Make a Donation to a Registered Charity

If you are feeling generous, you might be interested in donating your bonus to charity. To make sure that you get the full financial benefit from your donation, check to make sure that the organisation is an Institution of a Public Character (IPC) in order to ensure that your gift is tax deductible. The SG Bonus website will also allow recipients to donate their bonus directly to charities if they so choose.

READ MORE: 20 Ways You And Your Family Can Volunteer Together In Singapore

Get in the Gym

For Singaporeans that are not struggling to pay down their credit card debt, signing up for a gym membership could be a great way to use their SG Bonus.

While the average gym membership to a big chain gym in Singapore costs at least S$133, some gyms cost as little as S$30 a month making it possible for Singaporeans to pay for at least a few months in the gym using their SG Bonus.

READ MORE: 8 Common Fitness Myths People Need To Stop Believing

Additionally, research indicates that there are financial benefits of getting in good shape. For example, a study from Cleveland State University found that individuals that exercised at least 3 times a week earned 6% to 10% higher salaries than those that did not.

Finally, research by the World Health Organisation indicates that physically active individuals typically face lower health care costs, further exhibiting the financial benefits of investing in your own health by exercising.

Pursue Long-Term Returns

While you could use your new cash to purchase new clothes or for a fancy meal, you may want to have a longer-term perspective and use this money to earn more over time.

For example, investing in the stock market is an attractive option as the market as a whole tends to offer average annual returns of eight to 10 per cent, which are much higher than one could expect to receive from a typical savings account. If you don’t already use an online brokerage, refer to this guide of the best online trading platforms in order to find a brokerage based on your preference for low fees, fund types and a variety of other features.

READ MORE: Want To Start Investing? A Financial Expert Shares How To Start

Alternatively, if you are interested in investing in the debt or equity of local companies in Singapore, it is worth researching crowdfunding platforms. These sites allow groups of individual investors to invest in exciting startups and SMEs for as little as S$50 to S$100 per crowdfunding campaign, making it an accessible opportunity for all SG Bonus recipients.

The risk associated with these investments may be higher than more established, publicly traded companies; however, crowdfunding platforms tend to offer annualised returns of as high as 25 to 30 per cent.

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Text: William Hofmann, Value Champion SG