Raksha Bandhan: Financial gifting options you should consider for your sibling

Anil Rego

The most cherished Raksha Bandhan festival is here, wherein brothers vow to protect and care after their doting sisters. This sister-brother bond is like no other, and naturally Raksha-Bandhan day is sentimentally extremely important for families and siblings. It's a common sight to see sisters and brothers descend on streets to get gifts. Every year accessories, jewellery, apparel, boxes of sweets, and electronic devices top gift items' list.

This year, why not consider a unique gift? Financial gifts are unconventional but provide huge benefits. Here are four financial gifting options you should consider in 2017.

# Creating a bank account and deposit - If your younger brother or sister does not yet hold a bank account, its time for you as elder sibling to open one in their name. A bank account is the first step to financial freedom. The money you wish to gift can be deposited in this account and can be invested in a term deposit. This will earn interest and provide them with an additional source of income if required. The bank’s debit card will empower them to use the money in the saving account. In this way, you will be inculcating financial discipline. Do not forget to introduce your younger sibling to the joys of online banking and cashless transactions.

# Gift a SIP - A SIP or Systematic Investment Plan in a mutual fund scheme can prove to be an effective medium to fulfil your siblings dream. By helping them build a corpus for future use, a gift SIP is a contemporary and effective financial gift that has long shelf life. Start a monthly SIP for your brother or sister. While you can invest a minimum Rs 500 a month, keep the sibling as nominee. Inform them about the folio account number and product details. Pretty soon, a SIP can grow into a surprisingly large financial resource for your loved one.

# Buy mediclaim - Siblings understand each other much better. They also have a strong sense in terms of incoming challenges. Buying a mediclaim policy or health insurance cover is a smart way to express that love and care. Your brother may be dedicating his life to look after parents and providing care for you even after he got you married. Your sister may be toiling hard to fulfil her brother's dreams, ignoring health. As a sibling, it is our duty to ring-fence them and this is where a mediclaim comes handy. With the threat of lifestyle diseases and resultant expenses looming large, a health insurance policy will act as an umbrella ans protect them.

# Bond with paper gold - Siblings often want to give gifts that are durable, last long and store value. Paper gold serves these purposes beautifully. Physical gold is a problem, but paper gold forms like gold exchange traded funds, and sovereign gold bonds are extremely convenient for investment gifting purpose. You don't need to worry about physical gold like coins or bar. There is no jewellery making charge in paper gold. Plus, a transparent mechanism allows the investor to exit seamlessly and get the gains directly to their bank account, minimizing cash handling worries. Gold ETFs allow you to track actual gold prices and benefit from upward movement. Gold bonds offer the additional benefit of interest.

As you can see, financial gifts can be a nice way to express your love and care for siblings. This year, take an unconventional approach and give a Raksha-Bandhan gift that can truly last for a lifetime.

(The writer is founder of Right Horizons)