Personal Finance: Here are some financial gifts which can secure your loved ones' future

If you are thinking of buying something special for your loved ones for the New Year, then think no more! Gifting financial products would be the best thing to do. Imagine investing in something that can secure their financial needs and help them build a better future. Let’s look at some of the gift ideas that can make their 2022 special:

Stocks are always in: Buying stocks of reputed and financially sound companies is a good option. You can directly transfer the shares to the recipient’s Demat account by filling in their name, Demat account number and the number of shares to be transferred in the delivery instruction slip.

SIP in Mutual Funds: It involves systematically investing in funds of your preference. It’s a long-term investment where you need to make monthly, quarterly or yearly payments. It will help them achieve their goals.

SIP in Exchange Traded Funds (ETFs): Investing in an ETF is a unique way to brighten their 2022. You can invest in equity, gold or debt ETFs as per your likings. These instruments can be easily bought and sold in the secondary market and have low management fees.

Insurance policy: It has become extremely essential in these uncertain times to secure one’s family. Hence, buying a health and life insurance policy would be the most valuable gift for them. Decide on a worthy medi-claim policy that will suit your needs. Moreover, spreading the word on suitability concerning insurance will be of great value for your loved ones. Insurance should generally be purchased for protection against health and illness. There shouldn’t be any other insurance policy in the portfolio of an individual.

Buying an annuity: Effectively, annuities refer to a defined benefit pension, which the insurance company guarantees for life or a specific period to the beneficiary or an annuitant. A deferred fixed or variable annuity takes care of the longevity risk, that is, the risk associated with outliving the assets.

Some annuities also come with a death benefit. The death benefit not only helps that particular individual but also his or her immediate dependents in case of any unfortunate incident. Annuities shouldn’t be confused with insurance products. While only an insurance company is permitted to sell annuities, they are different from traditional insurance policies.

Gifting a subscription of a SEBI Registered Investment Advisor (RIA): Buying stocks and mutual funds involves risk. The risk here is better understood by market experts and professionals. Quality advice is quite underrated in today's digital world and hence gifting the service of a SEBI RIA will be very kind to your loved ones. Financial planning helps in the long run and only a registered investment adviser can add value here.

Paying-off liabilities: While credit discipline is important, paying off the debts of your loved ones if in distress, to whatever extent one can, will be a huge relief.

Financial knowledge: Enrol them for an online course that can facilitate their financial knowledge, enhance their financial planning and help them achieve financial independence. With proper knowledge, an investor is less prone to mis-selling.

(The writer is the CEO of Tavaga Advisory Services)

Published on: Sunday, January 09, 2022, 07:00 AM IST