Bonus deployment, in order of priority
Before chasing returns, run through: emergency fund top-up (6 months of expenses in liquid), high-cost debt clearance (anything above 12% interest), term insurance premium if pending, health insurance top-up, then tax planning for the year (ELSS or NPS contributions if on the old regime).
Only the residual amount goes into the discretionary equity / hybrid pile. Skipping the priority stack to chase returns is the most common bonus-deployment mistake.
Lump-sum vs 6-month STP
Academic back-tests on Indian markets show lump-sum modestly beats a 6-month STP into equity over 7+ year horizons — by roughly 0.5-1.0% CAGR on average. But the worst-case lump-sum (entering at a peak) takes 4-7 years to recover, which most investors won't tolerate.
For 80% of bonus investors, a 6-month STP is the lower-regret path. You earn 6-7% on the parked balance and dilute timing risk. The cost is opportunity if markets rip during the STP window.
Tax-efficient bonus deployment
If you're on the old tax regime and 80C is unfilled, route up to ₹1.5 L of the bonus through ELSS — that's a 30% tax saving at the top slab plus equity exposure. NPS 80CCD(1B) takes another ₹50K with a similar tax saving.
Request a callback if you'd like a personalised bonus-deployment plan with the STP schedule and scheme selection.