What should you gift your loved ones, on Diwali

Diwali is around the corner and you’re sure to be in the process of deciding what to gift your loved ones on the occasion. While sweets, clothes and money make great gifts, but think beyond them and consider giving a gift that will improve your loved one’s financial wellbeing this year. These gifts can be in the form of FDs, SIPs, and other financial instruments that you make in their names.

The reason why you should consider financial gifts beyond cash, is that money grows when invested whereas it doesn’t take long for you or your loved one to spend the cash in hand. When you invest money in an FD, for example, it is set aside for a fixed period of time and keeps accumulating interest. Hence it can help fulfil the recipient’s goals and so makes for a thoughtful gift.

Read on to know more about the 5 financial gifts you can give immediate family and close friends this Diwali.

Start a fixed deposit

Fixed deposits make great gifts for people of all ages. FDs are safe, earn good interest rates and give tax benefits too. You can consider investing in Fixed Deposit by trusted issuers like NBFCs to enjoy an interest rate up to 8.85% p.a. on your investment. By using an FD calculator you can calculate the exact amount that you will receive upon maturity as well. Say you invest Rs.50,000 at 8.85% for 5 years in the name of your grandchild, then the maturity amount will be Rs.76,403, thanks to the high FD interest rate.

In addition, when you invest through NBFCs you can also make use of a flexible tenor and online application and investment management facilities. What’s more, if you’re investing for your parents or grandparents, you can opt for a non-cumulative FD as this will give them payouts at regular intervals instead of a lump sum on maturity.

Create a Systematic Investment Plan (SIP)

Gifting an SIP to your child or spouse is another excellent alternative that offers substantial returns. An SIP is a great way to invest because it helps you minimise the risk involved in stock markets. Depending on the asset class you choose mutual funds give you substantial returns too. You can start an SIP with an amount of Rs.2,000 a month, for example, and due to the power of compounding and rupee cost averaging, in 10 or 15 years you’ll be able to multiply this amount manifold.

Buy gold exchange-traded funds (ETFs)

Diwali is the time when people buy precious metals such as gold. But since this involves making charges, you’re not getting as much as you should for the amount you spend. So, it is a better idea to invest in gold ETFs. These are better than gifting individual shares too because the latter require regular monitoring and reallocation.

Unlike shares, ETFs give you exposure to a group of equities, thus offering the benefits of diversification. So by investing in ETF you minimise risk and build wealth at the same time. What’s more, they’re easy to manage online and have low associated costs.

Invest in the Pradhan Mantri Vaya Vandana Yojana (PMVVY)

This is a good option to gift to relatives who are senior citizens, such as your parents or grandparents. It is an annuity plan that will give them a regular income. Once you make an investment, your parents or grandparents can earn a fixed interest rate of 8%.

Though this plan has a lock-in period of 10 years, it offers monthly, quarterly, half-yearly and annual pension. This will surely go a long way in helping your parents lead a comfortable life post retirement.

So this Diwali, skip traditional gifts and show your loved ones how much you care by securing their financial future.