Smart, practical financial gifts for your loved ones this Diwali

Ditch the traditional gifts and take the unconventional route this festive season.

Think of out-of-the-box but practical gifts says certified financial planner Ramalingam K.

Put some thought in what you gift and secure the future of your loved ones this Diwali.

Read on to find out more on what you can gift your loved ones:

For your parents

Giving gifts to parents on the day of Diwali is something every responsible child would like to do. But the right kind of gift ideas for parents are fewer. Here are two gift ideas worth giving to your parents.

1. Monthly income plan

When your parents grow old they will need monthly income. Gift them an investment option which gives a monthly income to them. You can get monthly income by investing in FDs, POMIS (Post Office Monthly Income Plans), mutual fund MIPs and the like.

Your parents may not be depending on you, but still then, this extra cash flow out of your investment gift will make them enjoy their life more when they retire.

2. Health insurance

Most of the insurance companies are ready to cover senior citizens with an extra premium or with a co-payment option. Co-payment is, when a claim comes the insurance company will pay some predetermined percentage of the claim and the balance will be co-paid by the claimant.

Gifting a mediclaim policy to your parents will relieve them from paying their hospital bills which are unavoidable when one grows old.

These diwali gift ideas for parents will be of immense help to them.

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The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the director and chief financial planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

For your spouse

1. Lifestyle assurance

How will your spouse feel when you give a gift that assures his/her present lifestyle forever? You are here today earning and providing a lifestyle to your family. If you retire, can the same lifestyle be maintained? If you suffer any mishap or disability, can your family maintain the same lifestyle?

To protect the lifestyle of your family after your retirement, you need to chart a detailed retirement plan. I am not advocating unit linked pension plan here. No. I am talking about a comprehensive retirement plan.

To protect the lifestyle of your family from your premature death, take a pure term insurance plan. I am not talking about ULIPs here. Pure term-insurance plan. Calculate in detail your human life value and then cover that amount of value with a term insurance policy.

Professional financial planners can be of assistance to you in drawing a retirement plan as well as finding your human life value.

2. Gold ETFs

If you are planning to gift gold coin to your spouse, think about gifting Gold exchange-traded funds (or ETFs). Easy to buy and sell. No need to safeguard these.

These diwali gift ideas will really surprise your spouse.

For your domestic help

Gifting a mediclaim policy to your maid-servant is also a good idea. There are chances they may not have bought such a policy on their own thinking that such policies are costly. Along with the mediclaim policy, you can add accidental insurance for your driver.

It is really very difficult to find good servants these days. Even if you find one, it is really very difficult to retain them. If you pay the renewal premium on behalf of them every year, they will be very loyal to you. They will think twice, before quitting your job.

These diwali gifts will delight them.

For your children

1. Piggy Bank

A Piggy Bank may not be a great idea when you are thinking about a Diwali gift. But you can teach your kids about money using a piggy bank by adopting a different approach.

Gift a piggy bank with 90 one-rupee coins. Set a target for the child to make it Rs 100 in a month. This motivates the child to save Rs 10 extra to make it Rs 100. Likewise you can set a target for a year.

Also announce a bonus when the child achieves a particular target. Say when the money in your child’s piggy bank reaches Rs 1,000 give the child a bonus of Rs 100.

The idea is not just to gift a piggy bank but also encourage and motivate a child to save.

2. Savings account for kids

Open a savings account for your kid. It gives a great feeling to the gift, when the kid gets a bank account in his/her own name.

Whatever cash gifts, the kid gets for Diwali, Christmas, New Year, birthday and other special occasion can be deposited in this account. Whenever the account balance crosses a particular limit say Rs 10,000 or Rs 25,000 withdraw and invest the same in mutual funds or FDs in your kid’s name.

This creates awareness among kids about savings and investments. You are laying strong foundation on personal finance management for your kid this diwali in the form of a gift.

3. Board games

Remember Trade or Business that we all played as small kids? A game like this can help your child understand the value of money, buying assets, spending less, saving more, investing and the like.

So many such online games are available online these days. These games can teach complete money management in a fun way. Diwali is also celebrated as Lakshmi pooja. It is nice to start money management lessons on this auspicious day of Diwali.

4. Mutual fund SIP

You can start a mutual fund SIP in the name of the child. You contribute only for the first month's installment and ask your kid to pay out of his/her pocket money for the subsequent installments.

This way you will teach your kid about the stock market nuances also.

For your friends and dear ones

• You can choose to gift some good personal finance books for your friend or colleague. Instead of sending them e-cards, you can surprise them by e-mailing a personal finance article with your Diwali wishes. Even this article itself can be mailed to your near and dear ones instead of an e-greeting! This diwali gift will make them understand more about personal finance.

• Instead of gifting money or gold, it is a good idea to gift bluechip company shares. Even a single share can be gifted. As it is a gift, people sentimentally will not sell them immediately and keep it for long term. A single share can grow with bonuses over a period of time. Let us start surprising our loved ones this Diwali with these unusual diwali gifts.