This Rakhi, help your sister in her financial planning by giving any of these gifts

If you are wondering what to get for your sister this festive season, well, other than getting something materialistic, why don’t you get a financial gift? It will be something that help her later on in her life and will protect her financially as well. Seeing as how the times are tough and trying, financially and otherwise for everyone, it is not just a good day to help your sister with her personal finances but also a crucial year to guide her in the same.

Here are four financial gifts you can get for your sister:

Open a bank or demat account in her name: If your sister does not have a savings bank account, open one for her. You can pay the minimum amount required to start the account for her. These days, certain banks are also offering ‘women’s accounts’ which have additional privileges attached. However, note that you will need your sister’s KYC documents for the bank formalities and if you are opening the account offline, she needs to be present with you.

If she already has one, then you can help her invest in a fixed deposit (FD). A bank account and an FD are interest-bearing and are a safe place for your sister’s money. However, for investments sake, make sure she doesn’t let her money sit idly in her bank account. An FD, too, typically meant for conservative investors, so if your sister is young, make sure she invests it in a product that can grow her wealth.

This is where equity investments come in. Your sister will need a demat account to invest in equities – be it directly or through mutual funds (MFs). Find out which bank offers a 3-in-1 option consisting of savings, demat and trading accounts.

Investments in gold: Other than buying physical gold -- coins, bars, jewellery -- you can invest in paper gold for your sister. It gives returns and provides protection and insurance against economic shocks, too. Gold in physical quantities for consumption comes at a higher price since it is inclusive of making charges. However, in case of gold as an investment, these charges are not present, which makes it relatively cost-efficient.

If your sister has a demat account or if you start one for her, you can invest in a gold exchange-traded fund (ETF). These are open-ended mutual fund schemes which invest in gold and tracks its market price. These are traded on the stock exchange just like regular shares. (Here is all you need to know about gold ETFs) You can also invest in gold mutual funds via the systematic investment plan (SIP) route. There are equity-based gold funds offered in the market, these invest in gold-producing companies. A demat account can facilitate any of these.

Note that your exposure to gold should be minimal, 5-10% is ideal. After all, it does bear a significant amount of risk.

Also read: How much gold should you have in your investment portfolio

Health Insurance plan: A health insurance policy will cushion the impact of medical expenses in case of a health emergency. You can pay for the policy premium on her behalf.

You will need her KYC documents for this as well and it is important to keep in mind that the insurance premium is devoid of any tax benefits, if the premium is paid in cash.

Gift cards: These days, besides banks like SBI, IDBI Bank, Axis Bank and so on, many e-commerce companies and retail stores such as Amazon, Walmart, Westside, Pepperfry, Lifestyle and Myntra offer these pre-paid cards, too.

You just have to load the card with any amount between Rs 500 and Rs 50,000. A gift card also gives your sister the freedom of choosing her gift, the price of which gets deducted from the balance available in the card. They are safe as they come with a unique PIN and function just like debit cards.

Also read: How to choose a gift card

(Note that third-party investments can't be made, i.e., you cannot make investments on your sister's behalf but you can handhold her in the above-mentioned ways.)

Financial guidance
Now, these are gifts that you can get for your sister. Guiding her to make the right investment decisions is also something that you can do.

You can educate your sister about financial planning by giving her financial books Tell her about financial journals that she can subscribe—most of them are available online as well. This can make her stronger and financially independent.

Lastly, make sure you give her her dues in the family properties and inheritance, make sure she is an equal recipient of your parents’ will.