3 minsJuly 25, 2017
In a less than a month from now, the festivity and fervour will begin. It sets off with Raksha Bandhan or Rakhi.
The history and eminence of Raksha Bandhan dates back to thousands of years and is garnished with many mythological stories. Raksha Bandhan in Sanskrit symbolises the tie or knot of protection a brother promises his sister. Hence,
on the auspicious day, sisters ceremonially tie a Rakhi on their brothers’ wrists and wish for their wellbeing. In turn the brothers pledge to protect and take care of sisters under all circumstances. Further, it is one of those several
festive occasions where family bonds are upheld. Therefore, today Raksha Bandhan is even celebrated between cousins, distant family members, and also non-biological brother and sisters, irrespective of caste, creed, and religion.
Weeks ahead of the festivities, colourful rakhis may have caught your sight, deliberating about the return gift you can give your sisters this year. The usual things one thinks of are purses, watches, jewellery, apparels, cosmetic kits, box of
mithai, chocolates, or dry fruits. But if you wish to protect her in a financial sense, here are things you should consider:
- Buy a risk cover
- Considering today's lifestyle comprising of long working hours, stress, lack of physical exercises, skipping meals, junk food, etc., the threat of facing an ailment is always present. So, if you really want to ensure the safety and
security of your dear sister, pay health insurance policies premiums on her behalf.
- Likewise, you can even be the proposer for her life insurance policy. But when you consider one, select term insurance and over others to indemnify risk to life in the purest sense. However, please note that you won’t be eligible
for a tax benefit under Section 80C for standing as a proposer to your sister’s life insurance policy.
- Start an SIP
—help her plan for her financial goals
- We all have financial goals—be it buying a house, an expensive gadget or vehicle, travelling for leisure, obtaining good higher education among many other things. But to achieve these in a systematic way, investing sensibly,
so money can work for you is imperative.
- Conventionally, one thinks of investing in Recurring Deposits (RD); but if you consider the rate of interest,
and the fact that interest is taxable amid a time where inflation is eating into your hard-earned savings, it can’t be the only option for your investments.
- SIP or Systematic Investment Plan in a mutual fund scheme(s), on the other hand, seems more promising. Remember selecting the best mutual funds
is critical. For a higher risk appetite and longer time horizon before a financial goal befalls, equity mutual funds can prove worthy as they have an effective portfolio multiplier. Just as you have financial goals, so does your
sister. And if you, as a dutiful brother, can help her fulfil some of them, she would be touched.
- Mutual funds provide diversification, are professionally managed, investments can be small amounts, ensures liquidity, and are well regulated by the Securities and Exchange Board of India (SEBI). But selection is crucial, and if you
aren’t well-versed, reach out to a financial planner or an investment adviser who can handhold you in this regard. Don’t make any decision in haste as it may prove detrimental. Until you aren’t sure where to invest,
park your money in a savings bank account and/or a liquid fund. And, if the time horizon before goals befall is short, consider investing in
ultra-short term and short-term debt funds.
- Open a Savings Bank account for her
- If your sister does not hold a bank account, open one in her name with a reputed bank. The money you wish to gift can be deposited in this savings bank account. This would prove handy, earn her some interest, perhaps pocket money and
give her the financial freedom to use the money as she desires. The debit-cum-ATM card that comes along can be used by her for shopping.
- Also introduce her to online banking which brings along the ease and convenience of banking
- Make a Fixed Deposit in her name
- Besides opening a bank savings account, you can even contribute to a bank Fixed Deposit (also known as term deposit) for your dear
sister. This will add to her financial security, earn her a better rate of interest vis-à-vis a savings bank and provide her with a source of income. But ensure that you’re selecting a reputed bank with a sound financial
standing while parking money in fixed deposit.
- Surprise her with a Gift Card
- Gift cards are prepaid cards offered by banks and widely accepted today at merchandise outlets and online shopping portals. Axis Bank has an e-gift card (also known virtual card) that allows you to instantly gift the receiver from
anywhere and can be used at online merchants in India who accept a Visa card. The gift card comes with denomination ranging from Rs 500 to Rs 50,000 and is activated within hours and in case of e-gift card almost instantly.
You don’t need to worry about the security of the money as it comes with a unique PIN, plus it’s easy to handle as opposed to doling out cash. A gift card can give your sister a chance to choose her gift within one
year from the date of issue on account of validity. However, cash withdrawals are not permitted and such cards are non-reloadable.
- Gift her a Credit Card:
- A credit card with perhaps a small credit limit can also demonstrate to be an extraordinary gesture from your side
Moreover, a credit card will introduce her to credit management
and its importance for a healthy better credit score (which reflects credit behaviour and credit worthiness). But when you handover one, subtly explain how to use it thoughtfully in order to avoid falling into a debt trap.
These thoughtful financial gifts for your sister will not only be cherished, but even add to her financial security and financial freedom, which as a true, loving, and caring brother you would always wish for.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm known for offering unbiased and honest opinion on investing. Axis bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.