Make Happy Raksha Bandhan wishes for sisters with these 5 financial gifts

Happy Raksha Bandhan 2018: Rakhi is just a day away and if you are still undecided about the kind of gift you will purchase for your sister, then worry not, we have some excellent ideas for you. First of all, forget the purchase of any product. Gone are the days of gift hampers and shagun, which have no potential to grow the money, which can actually provide financial security going forward. So, why not gift your sister permanent financial strength this Rakhi?

This Rakhi, secure the future of your sibling in the best way to show how much you care. Instead of buying a pricey smartphone, branded clothes, a box of chocolates and sweets, gift them an insurance cover, a mutual fund or a savings plan which will certainly be of much greater value.

These financial plans will grow with time and provide financial stability to your sister in her time of need so that she has to ask no one for help. You can choose from these plans:

1. Medical and Life Insurance
Accidents and ailments are part and parcel of life. The only thing anyone can do is prepare for them financially. How? By buying health insurance. We must be prepared to deal with any kind of eventualities that may come at any given point in time. A medical insurance plan can be one of the best gifts. You can also choose between life insurance plans and term-insurance.

"Although traditional term insurance products are preferred, Insurance products that cover the daily risks of commuting, seasonal diseases, lifestyle injuries are a better alternative. They are affordable, relevant and are built to fit today's lifestyle. Toffee insurance offers a suite of products in these categories that contextualise risks for everyday scenarios and are a perfect gift for your loved ones," said Rohan Kumar, Co-Founder & CEO, Toffee Insurance.

2. Shares
You can also gift shares of companies to your sister. Exposure to equity at a young age is the best way towards creating wealth. Since shares are movable property, one can gift these either by transferring them to her Demat account or by purchasing some new shares for her. If you transfer the shares, the shares received from the depository will be credited to your siblings account once the receipt instruction is received.

Also, one should always invest in stocks for the long term. There isn't any benefit of buying a stock if it fails to deliver a return. You should keep in mind the business a company is doing, whether it has a good track record, strong and trustworthy management before buying its stocks.

"You should choose stocks of the companies with good cash flows, good business scope, low debt or zero debt, good dividend history, and above all noted management with good ethics and corporate governance practice. These are stocks which should be bought or gifted for a long-term," said Jay Anand Thakkar, AVP - Equity Research, Anand Rathi Securities.

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3. Mutual Funds
You can also gift mutual fund schemes or start a SIP in your sister's name. You can also invest in Equity Linked Savings Scheme (ELSS) mutual funds. ELSS are also tax-saving plans but it comes with a lock-in period of 3 years.

However, it's better to choose between equity shares and SIP after thorough deliberation.

"In my point of view, gifting blue-chip shares is better than gifting systematic investment plan (SIP). There are many good blue-chip shares like Reliance Industries, HDFC Bank," said Nitin Murarka, Head of Derivatives, SMC Global.

4. Gold
Many times you tend to gift some gold ornaments to your sister. Gifting gold is considered auspicious, but the volatile gold prices may not best serve the purpose. Also, jewellery includes a number of other costs that hike the charges.

If you must buy gold, to get maximum gold value for your money, you should buy gold ETFs. They are flexible instruments that can be sold at any time. However, know that gold returns have not been the best over the recent period.

"In India, as tradition people prefer to buy gold as a gift. Gold is an auspicious gift for near and dear. This Raksha Bandhan, we are recommending to gift Gold, Gold jewellery etc to sisters. On this festival season, gold prices are trading at low levels around 29,900 on MCX, after making a high of levels 32,000 in May 2018. Globally Trade war tension and geopolitical tension rises and accumulation of Gold by Russian bank to increase their gold holdings, which suggest that the prices of gold futures are bright," said Anuj Gupta, Deputy Vice President - Research (Commodities and Currencies), Angel Broking Limited.

Gupta also said that Gold prices may touch 31,000 to 31,500 by next year.

Globe Commodities' Tarun Satsangi said that the gold prices are at 17-months low and may give 10 to 15 per cent return in next one year.

5. Savings Plan
Another great gifting option can be a savings plan, which will encourage your sibling to adopt the saving habit too. You can gift a Fixed Deposit (FD), open a Public Provident Fund (PPF) or National Savings Certificate (NSC).

If you opt for FD, you will have the flexibility of amount as well as tenure. You can start an FD with a minimum of Rs 5,000. PPF and NSC are government-backed schemes and give income tax benefits too.