Annual bonus ­ To pre-pay loans or invest?: In these days when banks offer attractive interest rates on fixed deposits and with gold prices awaiting to hit new highs, one may wonder if the bonus could best be invested in avenues like these.

But financial experts point out that anyone servicing an auto or car loan would be better off pre-paying the loan with the lump sum than investing it.

Any single asset, say a house or a car, has to be absolutely debt free. Only then would it really meet the purpose it was bought for; of providing security and being of use in times of a calamity. So the prime goal should be to make it debt free as soon as possible.

Monthly pay hike ­ To increase EMI or invest in SIP?: The double-digit salary hike predicted in surveys could possibly offset the food inflation effect, which is also in double digit levels. But nevertheless any hike in pay is a good hike and one should plan effectively to make best use of the money, experts say.

Many people think that an increase in salary means they have more money to spend. Every single rupee hike that one gets could ideally be invested in a systematic investment plan (SIP) that will take care of the future needs. If they have managed their expenses with a certain sum till last month, there is no reason why they cannot manage that way in the subsequent months too. The basic formula should be `income - savings = expenses' and not `income ­ - expenses = savings'.

For those who have not had a significant annual bonus or no bonus at all, increasing the EMI levels could be a good option.

Otherwise pre-payment of the loan from the annual bonus would have ensured the reduction or vanishing of the EMIs, experts say.

Is your insurance adequate?: With increasing salary levels the financial dependency of the family on the salaried individual also increases.