Best financial gifts for your sister this Rakhi

Let's look at some investment options you can gift to your sister this Raksha Bandhan, which she will treasure for rest of her life. Do remember the earlier it is, better the returns due to the power of compounding.

1. Health insurance

Since you have promised to take care of her for whole life, buy her a health insurance with an adequate cover if she doesn't have one. Such a policy will take care of any kind of hospitalisation in case of an unfortunate incident and will protect her from soaring medical expenses.

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Courtesy: Investment-mantra.in

2. Blue-chips for long term

Sizable amount of shares of a blue-chip, such as TCS, ITC, Reliance, State Bank of India , Bharti Airtel , ONGC , HDFC , HDFC Bank , Coal India , Tata Motors can prove to be a wealth creator for her in long run.

Alternately you can start equity SIP for her wherein you can invest specified amount of money in a stock each month on her behalf.

Investing in stocks, while being risky in the short term, always pays off in the long term. So, stay put in stock investments and do not hurry her to sell. You can take advantage of current volatility wherein market has a downward bias and valuations look quite attractive.

3. SIP in a diversified mutual fund

If you are hesitant about stocks, start a Systematic Investment Plan for her in a balanced fund such as HDFC Balanced or HDFC Prudence or a large cap fund such as ICICI Prudential Focussed Bluechip Equity or Franklin India Bluechip or DSP Blackrock Top 100.

This will create a sizeable amount of wealth for her by the time she needs it. The SIP way of investing averages the costs and can generate substantial corpus over long run. Start the SIP in line with future goals your sister may be having, like for instance, higher studies etc.

4. Fixed deposit in a bank

With interest rates on a high, an FD in her name in her bank account for a specified period may not be a bad idea. This will make sure it takes care of liquidity for her and at the same time generates decent guaranteed returns.

Short term debt funds , FMPs can also be considered.

5. Gift card

Most banks nowadays issue prepaid gift cards. These cards are usually Visa or Mastercard affiliated and you can use them to shop at any outlet that accepts them.

While a gift card is more personal than cash, it will also allow her the freedom to choose her own gift. Shop, dine, party -- she can use the card just the way she wants.

Also, most cards have an ATM PIN that will allow her to withdraw cash if she wants to.

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6. Gold funds/Gold ETF

Gold is a value preserver. Gold saving funds can be a great investment option in gold.

The biggest marketing pitch on it is that one can invest in this fund without a demat account and can set a SIP for the same. This is very much true.

The alternate option of Gold ETFs doesn't not allow investments and/or SIPs without a demat account.

You can look at setting a SIP for your sister this Raksha Bandhan to begin her allocation in gold. In addition storage is not a problem with Gold ETFs.

7. Gold coins

A long-lasting gift for your sister this Raksha Bandhan.

Gold has been traditionally the popular investment for Indians. In fact, India, even today is amongst the largest buyers of gold in the world. For instance, ICICI Bank Pure Gold is priced based on daily prices in the international bullion market.

Currently, gold is available with them in 0.5g, 1g, 2.5g, 5g, 8g, 20g and 50g categories, subsequently other denominations will also be introduced.

These make better investment sense than jewellery, simply because when you sell them, you get the full value, unlike in jewellery where you lose out at least 25 per cent in melting and make charges.

8. Investment in Public Provident Fund

Gifting money as part of her yearly investment in Public Provident Fund (PPF) can be opted for too. Assured and tax-free returns have made Public Provident Fund (PPF) a preferred choice for risk-averse investors for years.

It is an excellent tool for the long-term investment and is risk free since the government backs it.

9. Personal finance books:

Along with the above financial gifts, a personal finance book which underlies simple investment principles can be a thought of. It will make sure your sister acknowledges significant of saving and most importantly investing surplus corpus to achieve her short and long term goals.

Make sure you give her a book that is easy to understand and she can easily relate to her.

A financial Raksha Bandhan gift isn't as much fun as a regular gift. However such a gift is much more worthy then a box of chocolates from a fancy mall.