Gratuity money is the sum that your employer pays you in return for your loyalty and continued service to the company. Most people claim this amount at retirement, or when they leave the company. Since this amount is quite a substantial sum, it makes sense to invest it wisely. When done correctly, you can turn the gratuity money you receive from your employer into a source of income to finance post-retirement life.
One way of doing this is by using your gratuity money to open a fixed deposit.
Select a non-cumulative fixed deposit to generate monthly income
Fixed deposits are not only safe and secure, but they also allow you to choose the frequency at which you want to receive interest payments. You have the provision to either opt for a cumulative FD or non-cumulative fixed deposit.
To earn a monthly income, you must choose the latter as this will give you periodic returns. For monthly returns choose the monthly payout option, or depending on your need for finance, choose a quarterly, semi-annual or even yearly frequency.
On the other hand, in cumulative fixed deposit, the interest is compounded and the entire amount is paid to you at maturity. So, it is best to choose this option for when you want to create wealth in the long-term, and not when you want returns that replace a salary.
A fixed deposit that will allow you to earn monthly income is Bajaj Finance Fixed Deposit. Not only does this fixed deposit offer senior citizens a higher interest rate of 8.20%, it also allows you to apply and manage your investment online. Besides, you can benefit from a higher interest rate when you renew your fixed deposit, get guaranteed returns and choose a flexible tenor of your choice.
Apart from getting monthly returns, there are various other benefits that investing your gratuity money in a fixed deposit can offer you. Take a look at what they are.
It keeps your funds safe: Fixed deposits aren’t impacted by market fluctuations and so they provide stable returns. Choose an FD with ICRA’s MAAA or CIRISIL’s FAAA rating to ensure guaranteed returns.
It helps you beat inflation: In the absence of regular income, ensuring that your savings are sufficient, despite the rising inflation is important. Investing in a fixed deposit for a short term will help you do this.
It adds value to your investment portfolio: Having a diverse investment portfolio helps you enjoy high returns as well as increased safety. So, incorporating a fixed deposit is a must, as it will balance the risk posed by investments such as shares.
It serves as collateral: In case you ever need funds urgently, you can simply pledge your fixed deposit as collateral and get money in exchange. The rate of interest that you have to pay will be around 2% more than what you are receiving on the fixed deposit.
These are some unique benefits you can enjoy when you invest your gratuity money in fixed deposits. To ensure that you get all these advantages, be sure to choose a fixed deposit provider after careful consideration.