Many organizations use Profit Sharing (PLR) in their companies as a way of rewarding employees for all their hard work and dedication. As it is a bonus of retribution and encouragement, it is common for the beneficiaries' first thought to be to spend it all at once.
However, in some cases, financial goals can speak louder than the desire to spend. For this reason, the extra money in the account becomes an opportunity to make long-term investments. To help you choose how to invest your bonus, in this post we'll clear up some doubts and make you understand the importance of investing your PLR income.
What is PLR?
Antes de mais nada, é importante você ter em mente como funciona a PLR. A Participação nos Lucros e Resultados é um processo que une renda e trabalho. No caso dessa bonificação, o capital é distribuído entre os colaboradores com base no resultado final de lucro obtido pela empresa, ou seja, se houver lucro no orçamento do mês, os funcionários também vão ser recompensados pelo esforço.
But beware: PLR is a variable income and does not replace salary. What's more, its value is uncertain, since it depends on the profit made by the company. That's why, when you receive this benefit, it's important to use it wisely.
Here are three reasons to invest your PLR
In general, the PLR bonus is paid annually, although some organizations pay it every six months. That's why, before you start planning, it's important to pay attention to the model adopted by your company. Remember, the only way to be sure that this income will be reflected on an ongoing basis is to invest it!
Below are 3 reasons to invest in PLR and make it much more than just a bonus.
1. Paying off debts
Mitigating debts is almost as essential as increasing the profitability of the PLR bonus. After all, having extra money in your account doesn't help much if it ends up being used to pay off debts. That's why, in any investment model, it's important to focus on keeping accounts up to date throughout the year.
The biggest mistake a novice investor can make is to absorb variable income as if it were something fixed and increase the number of expenses. As it is an uncertain income, experts recommend that this money should not be put into previous accounts, but should be used as an agent when settling debts.
Remember that it's not just a question of using the bonus to pay off debts, but of using the income from this capital.
Invest the PLR in a safe asset and get the best possible return on the bonus.
2- Realizing personal dreams and goals
Human beings are generally driven by goals and dreams, and planning to make them all come true is essential. Can you imagine achieving your dream of owning your own home? By investing your PLR correctly, this is possible.
To do this, you need to make realistic budgets that outline short-, medium- and long-term goals (with an emphasis on the latter). The longer the redemption period for your PLR investments, the higher the return and the less you will have to pay in income tax (IR).
You also need to pay attention to the investment you choose so as not to lose money. One tip: invest in fixed-income investments, as the income tax deduction is lower the longer the redemption period.
3- Saving for retirement
Although the approval of the pension depends on the monthly deduction of an amount X your salary, there is no guarantee that it will provide you with all the security and comfort you need.
In addition, it can take a while for the pension to start being paid out and it still depends on certain requirements, such as age and a waiting period.
If you feel fearful and insecure about these issues, one of the advantages of the PLR is that it can be used as a way of guaranteeing a peaceful and secure retirement.
How is the PLR calculated?
Now that you have understood the benefits of investing your PLR, it is essential to know how your company calculates the value of this bonus, since there is no specific rule for calculating the value of the PLR.
As long as it follows the legislation, the company is free to determine the amount and number of installments to negotiate with the employee.
However, in order to do this, it is essential that the company is transparent when it comes to disclosing the employee's results, the quality of delivery, compliance with deadlines and productivity.
If you notice that your company is struggling with communication between sectors and lacks effective transparency, something is wrong. The best solution is to invest in software designed precisely to ensure the best use of all variable bonus models.
With Actio it's easy to draw up an effective PLR plan for your employees
Actio has developed software designed exclusively to ensure greater transparency when disclosing the targets already met at work and the extra bonus each employee will receive. With Actio Bonus Management you can access individual results by area and by employee in real time. What's more, the software helps to boost your company's results and performance.
So if you find it difficult to apply any type of variable remuneration, don't hesitate to use our software.
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