Salaried folks don’t just get their monthly paycheck; they also enjoy a bunch of other perks. One of these is gratuity. If you stick around with a company for 5 years straight, you become eligible for gratuity when you leave or retire.
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The gratuity amount is calculated using a specific formula, and it can vary from thousands to lakhs. While some people might spend this money as they see fit, savvy individuals choose to invest their gratuity to make even more money. Let’s break down how gratuity is calculated and explore some investment options for that amount.
So, how is gratuity calculated?
There’s a straightforward formula for it: Total gratuity = (last salary) x (15/26) x (number of years worked). For example, if someone worked for 20 years and their last salary was Rs 75,000 (including basic pay and dearness allowance), they’d receive about Rs 8.65 lakh as gratuity. The calculation uses 26 days per month since it accounts for 4 days of leave, and it’s based on 15 days for each year of service. Check out the slides below for some investment ideas for your gratuity.
Senior Citizen Savings Scheme
If you’ve received a gratuity amount in lakhs upon retirement, consider putting that money into the Senior Citizen Savings Scheme (SCSS). Your funds will be locked in for 5 years, and right now, the interest rate is 8.2%. This means you can earn a nice income from the interest on your gratuity amount.
Consider investing in gold
Gold is something everyone can benefit from. Whether it’s for weddings or other special events, there’s always a reason to buy gold jewelry. Plus, gold prices are on the rise. So, if you come across a good opportunity, you might want to use your bonus or gratuity to snag some gold jewelry. Over time, its value will go up, and when it comes time for your kids’ weddings, you’ll already have a nice stash of gold.
This way, you won’t have to pay a premium for new jewelry later on. If physical gold isn’t your thing, you can also look into digital gold or gold ETFs with that money.
Mutual Funds
If you’re savvy about the market, consider putting your money into Equity or Debt Mutual Funds. You could also consult with a financial expert to help you make the best choices, which could lead to better returns.
Fixed Deposit
If you prefer a safer option for your cash, think about putting a lump sum into a Fixed Deposit. There are various tenures available, so you can pick one that suits you and earn a decent interest rate.