As several people in the UAE are losing jobs or moving between jobs, they are receiving end-of-service dues from their employers. While it is typical of most UAE residents to spend their end-of-service dues, financial advisors warn them to save it instead.

However, where you invest it depends on your age and risk appetite. But before anything else, financial advisors suggest that people must have three to six months’ worth of living expenses in a savings account before they decide to invest. If you don’t have that, focus on setting aside that amount first. People should also look at investment only if they have zero debt.

In most developed countries globally, people tend to spend their end-of-service payments to settle their credit card debt. Personal finance experts advise people to live within their means rather than overspend.

Which asset classes to invest in

Equities

Bonds

Exchange traded funds

Real estate

Commodities

Fixed deposits

Not sufficient to fund retirement

Moreover, in the UAE, the gratuity amount is usually not sizeable enough for people to look at it as a pension fund. They should only use gratuity to add to their pension fund. For instance, the DIFC Authority has recently launched a workplace savings scheme where companies put employees’ gratuity payment into a fund every month. Employees also have the option to add to that fund, thereby creating a pseudo pension fund.

Unless a person has worked for the same company for his entire working life, it is hard to sustain their retirement with only end-of-service dues

Gratuity should be looked at just a savings account. End-of-service payment is not the biggest payment you will receive in your lifetime. People in their 20s and 30s must have a plan for their retirement rather than waiting to be in their 50s and then start planning it