Are you planning to hand out a couple crisp notes to your sister this Raksha Bandhan? But what about giving her something that will endure longer—something that would help her financially? Consider helping her attain financial independence or teaching her the fundamentals of money management. A money gift, whether it is an investment in her future or a contribution to her financial objectives, might be the most important present you offer her this year.
According to a DBS Bank India-CRISIL research, "47% of women seek advice and information from family members before making financial decisions." On the other hand, 27% of women seek help from financial counselors or chartered accountants. So, why not make this Raksha Bandhan memorable and educational? Empower your sister so that women no longer fall behind men in financial knowledge.
How can you help your sister financially?
This Raksha Bandhan, try giving your sister financial literacy. But how can you accomplish this? Begin with the fundamentals of budgeting and savings.
"You may start by making an overall budget for her, which involves tracking all of her income and expenses. Introduce her to the 50/30/20 guideline," says Siddharth Maurya, the founder and managing director of Vibhavangal Anukulakara Pvt. Ltd.
The 50/30/20 rule proposes:
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50% for necessities: food, rent, and utilities expenses
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30% for desires, such as eating out, hobbies, or shopping for enjoyment
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20 percent for savings and debt repayment: Making savings or paying off debts.
"Teach her how to utilize budgeting apps or spreadsheets to make things easier to track. After that, assist her in setting up automatic transfers to high-yield savings accounts for emergency needs and long-term goals," Maurya says.
You may also teach her about reducing unnecessary costs, boosting her income, and the benefits of compound interest. This information will boost her confidence in managing her money, reducing financial stress, and achieving her financial objectives faster.
Invest in Property
If you have the money, try giving your sister a property investment for Raksha Bandhan. A smartly designed plot or residence might help her achieve financial freedom.
"Real estate, like any other market, has its ups and downs, but it has proven to be one of the most reliable long-term investments," says Anurag Goel, Director of Goel Ganga Developments.
"Gifting property implies she'll have both a tangible asset and the opportunity for passive income from rents or appreciation. "It's a safety net for her financial security and a tangible asset that can grow over time, benefiting future generations," he says. Remember, location is essential. Look for places with new infrastructure or developing business clusters. Consult a real estate professional to make an educated selection.
Create a Diverse Investing Portfolio
Another method to make this Raksha Bandhan unique is to assist your sister in establishing a diverse investing portfolio. This might comprise a combination of equities, bonds, mutual funds, and alternative assets such as REITs or commodities.
"A well-balanced portfolio will provide growth with stability, which is how you'll help her build wealth," explains Aman Gupta, Director of RPS Group.
"Understand your sister's financial objectives and risk tolerance." You may invest in blue-chip stocks for stability, growth stocks for large returns, and bonds for consistent income. "Don't forget to include index funds for broad market exposure and some international investments for geographic diversification," adds Gupta. This present will not only benefit her monetarily, but it will also teach her critical lessons about money management and the necessity of diversification (never putting all of your eggs in one basket).
Open a fixed deposit or recurring deposit account: Encourage her to open a recurring or fixed deposit (RD/FD) account. You can transfer funds to her account on a monthly basis before they are deducted from her savings account and deposited in her recurring deposit account. Fixed and recurrent deposits will earn her a greater interest rate than a standard savings account. Both fixed and recurrent deposits are appropriate for short-term goals.
Systematic withdrawal plans (SWPs): Systematic Withdrawal Plans (SWPs) allow your sister to withdraw a fixed or variable amount on a regular basis, such as monthly, quarterly, or yearly. "The key benefit of an SWP is that it provides a steady income," explains Aditya Kuchibhotla, Chartered Accountant and Executive & Business Coach. This is especially important for retirees who rely on their investments for monthly income. It also lowers the likelihood of having to liquidate all investments during a market slump.
How does an SWP work?
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Choose a mutual fund scheme: Decide a mutual fund scheme to invest in and open an investing account with the fund house.
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Choose an investing mode: Decide whether to invest through a Systematic investing Plan (SIP) or a lump payment.
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Set up the SWP: Tell the fund house to take a set amount of money from your fund on a regular basis, such as monthly, quarterly, or yearly, and transfer it to your bank account.
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Withdrawal Process: On the chosen withdrawal date, the fund house will sell enough of your mutual fund units to cover the withdrawal amount and credit your bank account.
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Ongoing Process: This process continues at the specified time or until you cancel the SWP.
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Remaining Balance: The remaining balance of your fund earns returns based on the performance of the underlying assets. However, as you continue to withdraw money through the SWP, your account balance will decline over time.
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Retirement Fund: A retirement fund is a sensible present that can help your sister create financial stability in her later years. By opening a retirement account and contributing consistently, you may help her save for a happy future. Contributions to retirement mutual funds are tax deductible up to Rs 1.5 lakh under Section 80CCC.
There are two primary ways to invest in retirement funds:
Lump Sum Investment: This strategy is ideal for individuals who have a sizable financial reserve because it includes investing a large quantity at once.
Systematic Investment Plan (SIP): This entails investing a set amount each month, making it easier to monitor and grow assets over time.
Here are few of the Noteworthy Investment Options
Real estate investment trusts (REITs): REITs are a great gift option that allows your sister to participate in real estate without taking direct ownership. LC Mittal, Director at Motia Group, advises REITs since they provide chances for rental income and capital appreciation on properties such as commercial buildings and healthcare facilities. REITs provide strong long-term returns, allowing investors to develop their money consistently over time. Furthermore, REITs must distribute at least 90% of their taxable revenue as dividends, resulting in a consistent and appealing income stream perfect for retirees seeking passive income. Also, REITs provide access to a diverse real estate portfolio, which includes residential, commercial, and industrial buildings, without needing a large initial investment. This diversity minimizes the risks associated with a particular property or market.
Gold Investment: While gold is a valuable asset, maintaining its purity and liquidity may be difficult. Introduce your sister to paper gold, which includes sovereign gold bonds and digital gold ETFs. These choices offer the benefits of gold investing without the need for storage or security.
Medical Insurance: Healthcare bills may become a substantial hardship as we age. Giving your sister a health insurance coverage might help lessen the financial burden. This gift guarantees that she has access to high-quality healthcare without having to worry about the expense, giving her peace of mind and financial security.
Empower her Entrepreneurial Spirit: "If your sister wants to start a micro-business from home, consider providing the necessary funds to help her achieve her goals," says Vinnaayak Mehta, Founder of The Infinity Group. Whether it's a plant nursery, cooking tutorials, art workshops, or a little bakery, help her out by providing financial support and assistance in starting her business.
