Best financial gifts ideas for Raksha Bandhan 2020
New Delhi: Raksha Bandhan is considered as one of the important festivals in most cities throughout India. Sister’s blessings are considered a seal of divine protection for their brothers and brother's promise is considered the ultimate form of protection and security, Since ancient times, sisters tie “Rakhis” and in return, the brother showers her with gifts and sweets.
Brothers often end up contemplating as to what could be the perfect gift for their sisters. Rakshabandhan is around the corner (3rd August) and brothers are scrambling for gifts. Gifts can range from cash envelopes, gift cards, and personal items like clothing, electronics, and perfume. However, what if you were to move away from these traditional options and consider giving your sibling a financial gift this year which will increase their financial stability?
5 financial products that can be given as Rakhi gift for sister:
1. Gold Jewellery or Gold investment: Gold jewellery has always been considered a very precious and auspicious gift in India. There is also an established belief that gold prices are always stable and so gold jewellery will be useful for your sister if she ever faces any financial problems. Other than buying physical gold -- coins, bars, jewellery -- you can invest in paper gold for your sister as well. It gives returns and provides protection and insurance against economic shocks, too.
You can invest in a gold exchange-traded fund (ETF) for your sister. These are mutual fund schemes which invest in gold and tracks its market price. These are traded on the stock exchange just like regular shares. You can also invest in gold mutual funds via the systematic investment plan (SIP) route.
2. Pay off their debt: You could offer to pay an EMI (or more, if you’re so inclined), or help them make a part payment on their credit card debt. If your sister is repaying a loan, the payment of one additional EMI will go a long way in reducing their interest burden and accelerating the full repayment of the loan. For example, assume she borrowed Rs 50 lakh for a 20-year tenure at an interest rate of 8.70% and her EMI is Rs 44,026. If you make a principal payment of Rs 45,000 at the start of the loan, the total interest dues would come down from Rs 55.66 lakh to Rs 53.62 lakh meaning savings of over Rs 2 lakh.
3. Instead of consumables, gift them appreciating asset: While consumables such as perfumes, chocolates, or gadgets such as smartphone, iPad etc. are popular gifts, they are depreciating asset meaning there is not much return on this investment. But what if you could give them an appreciating asset instead? You can gift them precious metals like platinum, silver or gold, whose value would increase with time and aid their wealth creation efforts.
You could also help them invest in gold ETFs or gold mutual funds which are capital assets linked to the price of gold but don’t involve possession of physical gold, which means they can earn gold-linked returns without worrying about safe storage and metal purity.
4. Help them open an investment account: If your sister is not investment-savvy, you could help her open an investment account this Rakhi. This would help her create wealth in order to achieve her financial goals such as buying a home or retiring early. If she wants to invest in the stock market, helping them open a Demat account would be useful. In case they wish to invest in mutual funds, helping them open a SIP account is one of the best things you can do for them.
If they’re risk-averse and prefer guaranteed returns, you can help them open an account in a small savings scheme such as PPF or Sukanya Samridhhi.
If your sister wishes to buy a car or has some other short term financial goal, Systematic Investment Plans (SIPs) can help her out. SIPs are a way to invest in mutual funds that do not require much investment to start and are easy to maintain. You can set up a SIP for your sister and you can easily manage payments through the flexibility of amount and tenure. Through SIPs, your sister can enjoy the fruits of your investment.