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Smart Ways to Utilize Gratuity and Earn Impressive Profits

Employees receive several benefits along with their monthly salary, and gratuity is one of them. If you work continuously in a company for five years, you become eligible for gratuity. This amount is provided when you leave your job or retire. Gratuity is calculated using a fixed formula, and the final amount can range from thousands to lakhs. While many people use this amount to meet their immediate needs, smart individuals prefer to invest their gratuity instead of spending it, allowing them to earn significant returns. Let's explore how gratuity is calculated and where you can invest it for maximum benefits.

1) Understanding Gratuity Calculation

Gratuity is calculated using a specific formula:

Total Gratuity = (Last Drawn Salary) x (15/26) x (Number of Years in Service)

For instance, if an employee has worked for 20 years in a company and their last drawn salary (including basic pay and dearness allowance) is ₹75,000, then their gratuity will be:

(₹75,000) x (15/26) x (20) = ₹8,65,385

In this formula, a month is considered to have 26 working days, assuming four days are holidays. Gratuity is calculated based on 15 days of salary per year of service. Now, let's look at the best ways to invest your gratuity wisely.

2) Senior Citizen Savings Scheme (SCSS)

If you receive your gratuity upon retirement and it amounts to several lakhs, investing it in the Senior Citizen Savings Scheme (SCSS) can be a great option. This scheme allows you to deposit your money for five years and currently offers an interest rate of 8.2%. By investing your gratuity in SCSS, you can ensure steady income and secure your financial future.

3) Investing in Gold

Gold has always been a valuable asset. Whether for weddings or other occasions, gold jewelry is an essential purchase for many families. The price of gold has been consistently rising, making it a profitable investment. You can use your gratuity to buy gold jewelry at the right time, ensuring its value appreciates over the years. In the future, when you need gold for your children's weddings or other events, you will already have enough without needing to buy at high prices.

If you do not wish to purchase physical gold, you can also invest in digital gold, gold ETFs, or sovereign gold bonds, which are safer and more convenient options.

4) Mutual Funds

If you have a good understanding of the stock market, you can invest your gratuity in Equity Mutual Funds or Debt Mutual Funds. These funds provide the potential for higher returns compared to traditional savings options. If you're unsure, you can seek advice from a financial expert to make informed investment decisions and maximize your profits.

5) Fixed Deposits (FDs)

For individuals who prefer a low-risk investment option, Fixed Deposits (FDs) are a great choice. FDs come with various tenure options, allowing you to choose based on your convenience. Investing your gratuity in FDs ensures stable returns with minimal risk, making it an ideal choice for those seeking security over high-risk investments.

Conclusion

Gratuity is a significant financial benefit, and instead of spending it all at once, investing it wisely can provide long-term financial security and substantial returns. Whether you choose SCSS, gold, mutual funds, or FDs, selecting the right investment strategy can help you make the most of your gratuity and secure your future financial goals.

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