Where should I invest my gratuity amount?

I am 45 years old and have recently switched my job. I have received a good amount of gratuity. I am confused about whether to put this amount in PPF, NPS or mutual funds?
- Sameer

Do not invest the amount in PPF if you are investing for a time horizon of 15 years. Also, you cannot invest more than Rs 1.5 lakh in PPF in a financial year. In NPS, your money gets virtually locked till the time you attain the age of retirement. So, you are left with the option of mutual funds. And I would like to encourage you to invest in an equity fund if you are still going to work for the next 15 years. Invest in one or two multi-cap funds if you do not need this money for the next 15 years. Don't invest all the money at one go. Put all the money in a fixed-income fund and move it to the equity fund over the next three years. By staggering it over the next three years and investing every month, you will reduce the risk of catching a market high. This is a very important money. After investing it over three years, remain invested for the next 12 years. It can turn into a very significant amount for your retirement corpus.

This article was originally published on August 27, 2020.