The Valentine's day is here, and Cupid may look stupid for many. But if your intentions are sane, you may well give in to your romantic side. A financial gift not only makes for a seemingly wise choice, but you also increase the probability that your loved one will remember the gift for a long long time.
And yes, it does spare you from making that seemingly confusing choice- mugs, jewelry designs, flowers, chocolates, blah blah blah. A dark chocolate certainly looks appetizing, but a financial product that earns dividends and which can literally bear fruits will serve better in the long run.
Compared with a flowery valentine gift, financial products are quick to chose, based on an analysis of how much you can invest, and how much do you expect in terms of dividends. No confusing designs. Just answer the following questions:
- If you are gifting a ring, how well do you know the ring-size that will fit your loved one's finger?
- For exotic flowers, do you know how long the fragrance will hold?
- Is your partner a lazy snob for getting a fitness band as a gift?
- Is your partner into reading to get a kindle?
- Are you sure the smartphone that you are thinking about appeals to him or her?
- Who will water the sapling, in the event, you gift one?
- Gifting a pet? Buying a cute looking dog or a purring cat seems like the perfect thing that warms hearts. But remember, the responsibility of cleaning the poop, the vet sessions, the special food, and personalized requirement. In the event you don't claim responsibility for these, then buying a pet for Valentine's is as good as a noose for yourself as well as for the pet. The pet will be spared from the horrors of being dumped on the road or in a rescue home, in the event either of the partner decides to split.
A financial product seemingly is a good option. You need not know whether it blooms, neither do you need to spend your precious time in watering it. Moreover a financial gift helps,
- Shows you care about your partner's financial well-being.
- No sad perceptions such as "what will your boyfriend think when you gift him a perfume?"
- Way too different than a generic Amazon or a Flipkart gifting card.
- A great quirky idea. You would be among the very few examples of being discussed for a financial gift in his or her social circle.
- Regular pay-outs and dividends on gifts such as equities.
Without much ado, here are our top suggestions on the best financial gift for your special someone.
1. Forex Ideas: Starting 1 Rupee on wards
When the special vacation to Bermuda turns out to be a costly proposition, gifting the Bermudan Dollar certainly is a good gift. 1 Bermudan Dollar is worth Rs 64. You can gift some of the snazziest looking coins and even bank-notes. The most coolest banknotes includes the likes of Bank of England's Jane Austen note, and even the Kuwaiti Dinar, but there are good options for the budget-conscious too. Other cool looking bank-notes such as Bhutanese Ngultrum, Cook Islands Dollar, Hong Kong Dollars, Kazakhistan's Tenge are cheaper than the USD.
In case you are keen on investing above Rs 500, consider currencies such as Kuwaiti Dinar, Bahraini Dinar, Omani Rial, Latvian Lats, UK Pound, Falkland Pound, Gibraltar Pound, Jordanian Dinar, Euro, Manat, Currency of the Cayman Islands. The US dollar and Swiss-Franc- CHF or Euro would top the list as a great memorabilia.
The budget-constrained currencies could be ones such as Bolivia's Boliviano, Paraguay's Guarani, Costa Rican Colons (nothing intestinal about it), Belarusian Ruble, Cambodian Riel, Vietnamese Dong, Mongolian Tugrik, Hungarian Forint, Nepali Rupaiya, and even the Sri-Lankan Rupee. Do remember to read up on the culture and the prominence of the currency that you are gifting. There is high probability that the notes you gift will remain unspent and a cherished item in the wallet, but then they will also cultivate a new dream- a bucket-list for visiting a new destination.
You might have to haggle for a good deal at a local mint-shop, but travel agencies such as Thomas Cook, SOTC have dedicated Forex kiosks. You can also spot Forex outlets at most international airports. It will be wiser not to ask for a gift packing at such locations.
2. A healthcare policy:
Nothing better than a healthcare policy to show how much you care. Not only does it come helpful in protecting your loved ones against illnesses, but a medical policy can come in handy while submitting tax returns. A wide range of healthcare policies are currently offered. Aviva Life Insurance launched India's first ever heart insurance plan for couples - 'Aviva Heart Care,' in 2017. The policy covers 19 mild, moderate and severe cardiovascular conditions, and procedures. It allows lump-sum payout irrespective of the cost of treatment.
As an illustration, Aviva had shared that a typical 40-year-old male and 35-year-old spouse will pay Rs 4,634 per annum as premium for Rs 10 lakh cover for a 10 year term including taxes. However please do note that insurance premiums could vary.
Apollo Munich offers a healthcare policy for as low as Rs 682, Hospitalization cover is provided for a set of specific diseases within the policy period on same amount of premium. OPD cover of INR 10,000 also given for same disease. No medical tests required irrespective of age.
There are others too like HDFC Ergo, Universal Sompo, Cigna TTK, Religare, Aditya Birla Capital, Star Insurance, Max Bupa, and Bajaj Allianz that offer medical insurance.
With insurance, you can always start with a lower premium, and then increase it as and how the need be. Be sure to check with your financial advisor before investing, in case the amount is on the higher side. It would also be better to have plans and details compared, before you get into investment mode. In case you want to keep your gifting-investment discreet, opt for plans that do not have a mandatory medical test.
3. Recurring Deposit:
Recurring Deposit is a special term deposit that needs regular investments. The period of maturity varies from 6 months to a maximum of 10 years. Recurring deposits earn solid interest rates. Interest rates are revised periodically. With India Post, the minimum tenure is 5 years, and one is expected to invest every month in the RD. With India Post, the minimum deposit is an amount of Rs 10 every month.
There are no tax benefits as such in opening a recurring deposit, but if you fall under the 30% tax slab (salary or total income exceeding Rs 10 lakhs), then the interest from RD will be taxed at the same rate. Also, the interest on the recurring deposit is subject to tax deducted at source on the day of maturity. The bank may ask you for KYC documents while signing up for a recurring deposit.
4. Scrips/Stock Market:
Every gift has an intrinsic emotional value, which means that it will be held for a long period. And this benefits equity-stocks or scrips. Stocks, similar to Forex are available from rates as low as Rs 10 to many which sell in five-figures too. But remember to invest in a company that has sound technicals, meaning has good numbers, and there is a logical reason for the company to do well in the long-run.
You don't need to be a value-investor like Mr. Warren Buffett, Rakesh Jhunjhunwala or a Porinju Veliyath to track the best picks. But following these gentlemen in finding the best scrips can certainly be helpful.
Harshad Chetanwala, Head-Customer Delight at Quantum AMC finds equities as great financial gifts for near and dear ones. He says, "equities can be a gift that can continue to hold emotional importance as well as appreciate in value in the future."
The BSE Sensex was trading at 19,947.18 on 14 Feb 2013, and nearly five years later (13th February 2018), it is trading at Rs 34300.47. "The financial value has appreciated by 11.95% per annum," he explains.
"Those who would like to give a good financial gift can look at investing in a good proven Equity Diversified Mutual Fund with a good long term performance through SIPs. It is like giving Valentine Gift every month, and that’s really special," he adds.
Place your bets on a company that has sound fundamentals, and is geared to benefit from the economic reforms in the country. Here are some scrips that brokerage analysts and securities trading firms had placed their bets on, during the start of the year.
- Motilal Oswal: FMCG major Dabur's shares could trade to Rs 410. Dabur currently sells at Rs 344.80. Nilkamal, the plastic chairs manufacturer's share price would rise by as much as 32% in one year to Rs 2215. Nilkamal sells at Rs 1809.25.
- Geojit Financials: Bank of Baroda shares could reach Rs 208 at the end of 2018. Currently, the bank's shares sell at Rs 168.75.
- Edelweiss Securities: Birla Corporation poised to reach Rs 1300 from current range of 1015 per share.
- Axis Securities: Interglobe Aviation to reach Rs 1505, from current price of Rs 1248.
- Reliance Securities: Ramakrishna Forgings to surge upto Rs 975 from Rs. 801.
- Top stocks: In case you want to buy the best valued scrips. Here are top 5 stocks: MRF (71,550), Eicher Motors (27,873), Bosch (19,544.25), Shree Cements (16,937.10), Page Industries (22,021).
- Tax: Tax department states gifting shares to a relative is not subject to income tax act. Shares upto a value of Rs 50,000 are not taxable in the hands of the donee, even if one is not a “relative” according to the department.
- Do remember that you would need shares in physical form and also get it transferred in the name of your dear ones.
- LTCG: The complexity around LTCG (Long Term Capital Gains Tax) and STT (Securities Transaction Tax) would persist, but these would be liable only on the day the shares are further sold. Earnings of over Rs 50,000 in a financial year is taxed as income from other sources. With LTCG kicking in, tax will be computed at the cost at which you acquired the shares.
- Share transfer: The donor has to fill a Delivery instruction slip, submit it to a depository participant, mentioning the date of transaction, DP ID, DP name, client ID of the donee, and the number of shares. The donee on the other hand, has to fill out a receipt instruction stating the number of shares, details including DP ID. In the event, a physical certificate exchanges hands, a share transfer deed will have to be executed, and sent to registrar of companies.
For equity transactions, a gift deed is not compulsory, but legal pundits suggest that a gift deed will offer as a legal record, hence better to execute one on an appropriate stamp paper.
5. Bullion and Paper Gold:
Diamonds maybe a woman's best friend, but then fears of artificial diamonds has sparked fears even among established traders. You will be better off steering clear off diamonds for the time being. The Yellow metal is certainly a good gift. But, if karats and grams seem confusing, you can opt for the Sovereign Gold Bond or Paper Gold.
Most banks offer subscription to sovereign Gold bonds. These are bonds denominated in units of one gram and multiples. A subscriber can buy a maximum limit of 4 kilos. Subscribers must hold investments for a period of 8 years, and an exit is possible only from the 5th year onwards. You will have to transfer the ownership to your loved ones, quite similar to how securities (movable) are transferred. The best part is how individuals are exempted from capital gains tax on redemption of bonds.
For people who are interested in buying and gifting gold, coins and bars could be a very simple option. You need not haggle over making charges, and still get to choose from a wide variety of gold coins. Gold coins come in various shapes and sizes. Right from Malabar to Gitanjali, most retailers sell 1 gram Gold coins. In fact Paytm also offers a digital gold. It is upto the owner to keep Gold stored in digital lockers or have it in phsyical form.
Mutual Funds: Sahi Hai
You must have seen the AMFI (Association of Mutual Funds in India) advertisement that said "Mutual Funds Sahi Hai''. Well investments in Mutual Funds are actually 'Sahi', but there is a hitch. Mutual Fund investments cannot be sought on a different party's name, neither can the ownership be transferred. This means that you are technically buying a mutual fund on your name, and cannot distribute or transfer it with your loved ones.
But, Dinesh Rohira the founder at 5nance.com, a robo-advisory platform suggests that equity funds are still a great way to create wealth. He shares an example. "Let’s suppose, in 2008 you invested for your partner in Sensex with nominal amount of Rs. 20,000 invested every Valentine’s day. Taking a simplified 10-years average rate of return at 17.38 per cent per annum, it would have grown to Rs. 5,35,605 with total net investment of Rs. 1,80,000."
He calls gifting mutual funds an unlikely one on Valentine's day. But it certainly is one that makes difference to, "help your partner rejoice every valentine’s day in more sensible way."
"Gifting a SIP with very nominal value of Rs. 1000 per month will significantly add wealth over a period of time. Taking a sample from HDFC Top 200 funds under a large cap category, a SIP of Rs. 1000 per month for next 10 years would have grown to whopping Rs. 53,70,311 with investment of just Rs. 120,000. This is probably the valuable gift you can present to your partner."
Average return on midcap equity funds in 2017 returned a staggering 21 per cent, and hence investments in mutual funds are a great investment bet. For better clarity from investments, the two partners could set a joint bank account for the monthly payments.
For all the bad-news and the scarce good-news, bitcoins do make for a good investment- but only when you can correctly time the enter and exit. Compared to investing in equities, or even Paper Gold. buying Bitcoins appears simple. For instance, all that you need to do is sign up for a service like Zebpay, UnoCoin or Coinsecure etc. And buy, hold and sell.
But be prepared to have even the faintest rumours affect your bitcoin holdings. Early investors in bitcoin held their bets, in fact, they started when one dollar could purchase multiple bitcoins. Bitcoin raced off to $20,000 per coin, and then slumped to lows of $5600 around the second week of February. For the record, gifting one Bitcoin could cost you Rs 547,281.88.
But don't worry, in case you find this exorbitant, you can always sign-up for bitcoin alternatives such as Ripple, Ethereum, or even Cardano. There is a slight chance that these could gather momentum in the near future. And hence a good future is expected, unless, the Indian government decides to whip up a policy.