This Raksha Bandhan, give more than cash: Gift your sister financial wisdom and investments

A thoughtful financial gift can be a meaningful way to celebrate the special bond between brothers and sisters.

You might be planning to gift cash to your sister this Raksha Bandhan, but why not think outside the box this year? How about empowering her with financial independence? A thoughtful financial gift can be a meaningful way to celebrate the special bond between brothers and sisters. Whether it's an investment in her future, or a contribution to her financial goals, a financial gift is the new way to not just give a gift, but also something that can last for a long time to come.

Creating a bank account and deposit

Say, you have a younger sister who does not yet hold a bank account. It’s time you took her to the bank.

A bank is the first step to teach her about financial services and products. The money you wish to gift can be deposited in this savings bank account and can be invested in a fixed deposit. It’s a secure investment option, providing a fixed return and a sense of financial security. This will earn interest income for her future goals.

“You can get your sister to invest in fixed deposit schemes as well, particularly government backed and those that tailored for women like Mahila Samman Savings Certificate, 2023, which offers an interest rate of 7.5 percent that is compounded quarterly,” says Ruchika Bhagat, MD, Neeraj Bhagat & Co, a chartered accountant firm. The minimum amount to invest is Rs 1,000 and tenure is two years.

Gift an SIP

If you want to plan for a slightly longer term and wish to contribute to her wealth creation, set up a mutual fund systematic investment plan (SIP) for her. You could even start with a lumpsum contribution and set up the SIP for her.

One way of doing this is that you start and then maintain the SIP in your name but keep the sister as a nominee. You can start off with a minimum of Rs 500 a month. Inform her about the folio account number and product details. Pretty soon, an SIP can grow into a surprisingly large financial resource for your loved one.

For instance, you invest an amount as low as Rs 500 per month for her over a period of 10 years, starting today. Assuming the rate of return to be at 12 percent, you’ve invested Rs 60,000 over this time period. As per the SIP calculator, you’ll have generated almost Rs 1.16 lakh in returns (see graphic). This amount can serve her higher education or professional ambitions.

An SIP qualifies as a beneficial investment strategy in today’s scenario. “The secret is to get started early and to stick with it,” says Nitin Shahi, Executive Director of Findoc, a financial services firm. Investors can create the foundation for a stable financial future by embracing the power of compounding, he adds.

The gift of financial education

Contribute to your sister's education or skill development fund. Gift her some financial knowledge. Encourage her to read up about financial planning, investor behaviour and investment products by gifting her books, e-books, audibles or learning subscriptions, so that she takes up the mantle of becoming financially literate and confident.

“You can also enrol your sister in a programme or a workshop that will educate her on finance and help her understand various financial instruments and the calculations behind them,” says Vikas Singhania, CEO, TradeSmart, an online stock trading platform. Just be sure to keep away from finfluencers or social media influencers on social media who gives stock market courses with a back-handed arrangement or promise to give high returns if you invest through them.

Buy an adequate insurance cover

A comprehensive health insurance policy ensures that your sister's wellbeing remains a top priority. Faced with rising medical costs, such a policy can provide her with access to quality healthcare without straining her finances.

This comprehensive approach will safeguard her from medical emergencies with health insurance cover taken at a young age. “It’s one of the best protections a brother can offer his sister,” says Singhania. Buying a health insurance plan will give her the security to withstand financial shocks on account of health issues, he adds.

Also read | Health insurance: How to choose the best plan

Draw up a personalised financial plan

Help your sister build an emergency fund to ensure her financial security. Also, offer to help her create a personalised financial plan or investment strategy. Understand her financial goals and book an appointment with the financial advisor to flag her goals. This will not only empower her to achieve financial stability but also foster emotional connections and a sense of security in life. “More importantly, you can also oversee her financial planning regularly and assist her in case a course correction is needed,” says Singhania.

Also read | Has budget ‘24 put gold ETFs at an advantage over gold mutual funds?

Bond with paper gold

If you must buy gold, we suggest a gold mutual fund or Exchange-Traded Fund or a sovereign gold bond (SGB) from among those that are listed. Jewellery has great aesthetic value and your sister may like it as a gift. “If your sister prefers using or wearing gold, go for physical gold options. But if she’d rather have it as an investment, gifting gold ETFs or SGB may be the smart way,” says Adhil Shetty, CEO, Bankbazaar.com.

Remember, the gift of financial security and support is a thoughtful and meaningful way to celebrate Raksha Bandhan.