“Bhaiya mere, Rakhi ke bandhan ko nibhana….main tumhe pyaar doon, tum mujhe badiya sa gift dena..!” –

Your loving sister

Raksha Bandhan is the Hindu festival that celebrates brotherhood and love across the world. Every year festival is celebrated on the full moon day in the month of Shraavana (August) according to lunar calendar. Raksha Bandhan means “bond of protection” and it is a tradition that sisters tie Rakhi (sacred thread) on the wrist of their brothers and in turn they promise to protect them in any crucial situations. On this day you (brothers) give gifts, chocolates and sweets to loving sisters and showcase their caring nature. This year give your sister a surprise by some financial planning gifts which will be cherished and helpful in the future.

Let’s look at 8 financial planning gift options which you can consider for your loving sister in this Raksha Bandhan:-

Gift personal finance books / magazines

In case, your sister loves reading then plan to gift her personal finance books. This will educate her with importance of financial planning and develop savings habit. In future, her spending habits could change with this self-help finance planning books and will start saving income to invest regularly which will help to achieve her short and long term goals. You can even subscribe to personal finance weekly/ fortnight/monthly magazines. This can be renewed as a gift every year. Such, magazines will keep her educated with personal finance products and financial planning strategies for life time.

Recommended personal finance books are as follows:

• Rich Dad Poor Dad by Robert Kiyosaki
• Your Money or Your Life by Vicki Robin and Joe Dominguez
• Secrets of the Millionaire Mind by T. Harv Eker
• Ernst & Young's Financial Planning for Women

Recommended personal finance magazines are as follows:

• Moneylife – fortnight magazine
• Outlook Money – fortnight magazine
• ET Wealth – Weekly newspaper
• Financial Planning Journal – Monthly magazine

Insure your sister under health insurance policy

As we know, Raksha Bandhan festival is about love / care between brother and sister. Insuring your sister under health insurance coverage (mediclaim policy) will be one of the best gifts. Due to rising inflation, costs of hospitalization and healthcare is moving up. In case of ill health, large hospitalizations could cost lakhs of rupees which will incur big hole in one’s savings or worse, burden one with huge debt. So, insuring your sister under health insurance policy will take of uncertain hospitalization expenses due to sickness and accidental injury. You can even renew the policy every year as a gift.

Investment in bank fixed deposit

You can give bank fixed deposit (FD) certificate to your sister as a gift. This will be one of the safest investment products because it’s a liquid fund and generates guaranteed return. Principal amount will earn compounding interest in its term. The bank FD can be easily renewed or withdrawn at maturity.

Investment in Public Provident Fund (PPF)

Investing amount in her PPF account is also alternative safe investment option. The investment will earn compounding interest annually. This product is safe investment option for risk adverse investors and earns tax free returns. The corpus will take care of expenses in retirement years or to fulfill long term goals of your sister.

Start Systematic Investment Plan (SIP) in mutual funds

Start SIP investment in mutual fund schemes on behalf of sister. The income earned will be useful for her higher education, marriage expenses, setting up business and such in future. Investing for long term in mutual funds through SIP route will take care of volatility in the market and gives higher returns compare to safe investment products. While investing in mutual fund, take an advice of financial advisor/financial planner. The person will recommend mutual fund schemes based on your risk appetite and tenure of goals. Some of the best performing equity diversified SIP mutual fund schemes are ICICI Prudential Discovery, HDFC Top 200, Reliance Equity Opportunities, SBI Magnum Emerging Business, etc.

Investing in Gold for your sister

Every woman loves shine of gold but it’s difficult to afford since prices have increased in last few years. This has made it difficult to afford for most middle income persons. However, you can invest regularly on behalf of sister in gold funds, gold ETF, gold coins over a period to build corpus. Investing in gold jewelry is not recommended because it will make you lose out at least 25% in melting charges when you go to sell in the market. Order for gold jewelry as per market trend when sister’s marriage (other occasion) in nearby.

Prepaid cards (Gift cards)

In India most banks including SBI, ICICI bank, HDFC bank, Bank of Baroda, etc now-a-days issue prepaid gift cards on special occasions. These cards are affiliated by VISA or Mastercard and used in shopping at any of its network in India. These cards are perfect substitute for cash and can be used for shop, dine or party. Your sister can purchase gift of her choice by using this card. The card has a validity of one year to utilize the amount from date of issue. Most banks provide a pin number with card to withdraw cash from ATM. So, in case of emergency prepaid cards can be useful as contingent fund.

Gift DVD’s (movies) to your sister

Sometime, fictional story conveys the message in much effective way then one explains through words or presentations. So, I recommend gift your loving sister set of DVDs (movies) to explain importance of financial planning in her life. There are three such movies as discussed briefly:

• UP - Animation movie from Disney

The story has characters portray real life situations a common man comes across in personal life. These situations are saving for dream home, vacation, paying off student loans, buying a new car, etc but unexpected expenses comes on their way in life and they lack contingent (emergency) fund to look after this expenses.

• Zindagi Na Milegi Dobara (Bollywood)

This movie explains greed, fear and surprises in life from three different characters i.e. Arjun, Imran and Kabir’s point of view. They are common people around us having some or the other problems in life but try to run away from it. Managing greed, fear and surprises are important aspect in financial planning which needs to be developed.

• Tara Rum Pum (Bollywood)

This movie is a classic example explaining importance of financial planning in everyone’s life. The story revolves around a couple caught in a vicious debt trap. Since, they lived a lavish lifestyle on installments and had no clue about financial planning and how it benefits them.

This year be a well-wisher to your sister and educate her on financial planning by choosing a gift from 8 options discussed above. A simple message you need to convey your sister is have a financial plan in hand to achieve your goals on time. Also, enjoy pleasant lifestyle without hiccups coming in your way.

Author

Hiral Thanawala is a PGDM (Finance) graduate and Certified Financial Planner. He can be reached at hiralthanawala@gmail.com.