Where should I invest my gratuity money?

I am 41 years old and received Rs 9 lakh as gratuity. I have recently changed my job. How and where should I invest this money? Besides this, I am already investing Rs 25,000 every month in mutual funds.
- Ravish Malhotra

One good news is that all your money is tax-free because it is not your income. This is the money on which you are not supposed to pay taxes. Earlier the ceiling for this was Rs 10 lakh. The government has been very generous, and now this limit has been increased to Rs 20 lakh. So if you get any gratuity amount up to Rs 20 lakh, it is tax-free.

You can answer this question best. Only you know when you are likely to need the money and what has been your experience with investments.

If you are investing for the first time and are not likely to need this money for the next five to seven years, start with an aggressive hybrid fund or a balanced advantage fund. If you are experienced with investing in equity markets, then maybe invest in a flexi-cap fund. But should you invest in one go? Never. You should always spread your money over time. Be gradual about it. So spread your investments over the next 12-18 months because it's very important money resulting from working for many years.

So your long-term money should be invested in equity or hybrid, depending on your experience. If you are likely to need this money in the next two to three years' time for some specific goal, then put it in fixed income, a short-term bond fund only.