In India, Diwali is much more than the festival of lights and sweets. Perhaps, the festival in ingrained more with spending quality time with family, gifting near and dear ones and reminiscing the old memories while creating new ones to cherish for tomorrow.
While I revisit my Diwali years back then, I can still vividly remember how my mom and her siblings used to share gifts such as dry fruits, candles, sweets and chocolates. Obviously, it’s indeed a sweet gesture to display your love and affection on this auspicious gala. However, these gifts did not rank high in durability as well as functionality.
With Diwali round the corner, many of you are scouting out for the best Diwali gifts for your loved ones. And it’s not just you, I was also on the Diwali shopping spree for my family a few days back. But then it struck to me: On this Diwali, what I can gift to them so they feel special and at the same time have the potential to multiply with time. If you want to gift something special to a loved one, nothing can be better than securing their financial future After all, the festival is all about wealth, prosperity and merriment, right?
After a lot of research, here I bring to you few of the best Diwali gifts that you can give this Diwali:
Public provident fund (PPF): This is one of the most popular long-term investment plans that offer tax benefits to the tune of Rs. 1,50,000 under Sec 80C. Currently, the interest rate on PPF is approx. 8%, which is negligibly higher than the interest rates on FD’s and savings account. PPF accounts give the liberty to open accounts in the name of the minor if you want to give your child a secured future with fixed returns. On this Diwali, you can give PPF to your child which will help your child to get the best higher education as well can be used for his wedding gift as well. However, PPF comes with a high lock-in period which needs to be considered while investing in them.
Sukanya Samriddhi Scheme: My sister, who is a doting mother of a 5-year-old girl child, decided to pamper her daughter, not with toys, crackers and clothes. Instead, she decided to secure her education by investing in this scheme which currently provides an interest rate of 8.5% p.a. and tax benefit with an annual limit of Rs. 1,50,000. She says, “If I start investing now, I am sure the need will be covered by the time she reaches 18.”
Equity investment: Equities have been undoubtedly one of the best performing asset classes delivering a CAGR return of 13-14% over the last 20 years. The best part is you can transfer stocks directly to the recipient’s demat account after sending an instruction. With this, a few basic instructions and legal documentation are required to be recorded legally. If the equity investments are backed by proper research, then they have the potential to grow manifold with time. Now, consider this: Any other gifts such as jewelry, gift cards, gizmos, designer bags, have the same potential to grow with time? If you’re unable to identify such stocks, taking the help of a credible financial advisor can help you to give a gift of a lifetime.
Gift for health: As rightly said, ‘Health is wealth.’ In the hustle and bustle of daily cities of a polluted environment, health has become an alarming issue. With the increasing number of health issues amongst the populace, gifting a health insurance plan to your loved one can be one of the best Diwali gifts. Nowadays, health insurance cover maternity expenses also and many health insurance companies also facilitate customized schemes.
Mutual funds: If you don’t wish to invest directly in equities, mutual funds can be an alternative option. However, you cannot customize the fund as per your risk profile and objectives. When gifting a minor, mutual funds do have a certain limitation which needs to be considered. One needs to note that these gifts are taxable, hence you need to be aware of tax liability before gifting or contributing to SIP.
“Investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future.”
Few words of wisdom
The above-mentioned points can be considered while gifting your loved one on this Diwali. It’s important to invest in the right places to make money work for you and gifting a financial instrument that grows with time can be a life-changing experience for them. For instance, equity investment is best suited for the long-term horizon, with high returns. As Albert Einstein said the power of compounding is the eighth wonder of the world. This Diwali, invest wisely and gift carefully so that you and your loved one get an opportunity to experience financial security and freedom in the future.