As a dotting family man, you would be busy charting out various plans for the financial prosperity of your dependents. The best way to ensure so is by investing in products that can generate maximum returns for you over time. But what if those investment returns get consumed towards long-lasting hospitalization expenses or any other cause? And what about your dear ones after your death? So, you need financial protection against such incidents. Besides, you can’t lose sight of the wishes and aspirations your dear ones pin on you to fulfill. Keeping in mind all these, we’ve listed here the financial gifts you should give to your loved ones.
So, What are Those Financial Gifts?
Financial gifts include term insurance, health insurance, investments in stocks & mutual funds, or even loans. The importance of each of these products for your family’s prosperity is wide-ranging. Let’s check their importance in greater detail below.
Stocks – One of the Best Financial Gifts for Your Loved Ones
Investments hold the key to living a life full of pleasure and comfort. It ensures the growth of your money and helps achieve tons of wishes such as a fat wedding, exotic travel, or even emergency needs that most of us ignore. But a newcomer can falter while choosing from a wide gamut of investments for the goals mentioned above. People often like the stable returns of fixed deposits, ignoring the redundant sum it will lead them to when facing skyrocketing inflation. Go beyond your conservative investment mindset and trust the power of stock investments. Yes, they are risky but can lead to enormous returns over the long term.
How to Approach Stock Investments?
You need to learn the art of smart stock investments, and the rest will take care of itself. See the market and its trends and choose the right stock for investments. And yes, there can be periods of lows. So, be patient while that’s on.
Now, stocks are available at a particular price based on their demands. Buying them at a relatively low price and selling them when their price goes skywards is one smart approach. Redeem them and buy another set of quality stocks at a low price and sell them at the right time. Follow this strategy till you achieve the goal amount.
It may not be that linear though as the broader market fall takes a toll on almost every stock. But the resilience of quality stocks often helps them recover better than the others. So, choose the stocks of companies having robust finances and management control.
What More Due Diligence You Need to Do?
Check online the net profits companies post quarterly and read their trends thoroughly. See the business moves they have made regarding their products and customers. Mergers and acquisitions made by them should interest you a lot. Here, you will need to learn about the other entity too with which the company whose stock you intend to buy will join hands. If that entity has been going through a rough patch for long, maybe look to divert some of your investments to other champion stocks. Picking stocks based on this due diligence will help you meet the investment challenges successfully.
Equity Mutual Funds – The Best Bet for Someone New to Investments
You can imagine the enormous expertise required to ace stock investment challenges. Checking minute details regarding stocks can be cumbersome for new investors. That brings focus on mutual funds, which are managed efficiently by fund managers. These managers bring their in-depth market knowledge into play by choosing handpicked stocks and doing all that an avid stock investor would do for wealth creation.
You can invest in large-cap, mid-cap, small-cap or even tax-saving ELSS funds. While large-cap funds invest in the stocks of the top 100 companies according to market capitalization, mid-cap funds invest in the top 101-500 companies. The ones afterward belong to the small-cap class. ELSS or Equity-linked Savings Scheme offers you tax exemptions up to INR 1.5 lakh in a financial year, besides letting your money grow big.
But, How to Choose from Wide-ranging Equity Mutual Funds?
You can do so online by checking the performance of different mutual funds across different tenures. Since it’s about stocks, avoid having an impression of the fund basis its short-term performance, which can be either spectacular or dull. Check the long-term performance, something like how funds have fared over 5-10 years. Choosing this way will help you select the right mutual fund for investments.
Which Mode of Investments Should I Go for?
You can invest in mutual funds using either a Systematic Investment Plan (SIP) or a lump sum. An SIP is a tool by which you can invest money regularly and systematically into funds that buy stocks with the same. You can invest in mutual funds at monthly, quarterly, half-yearly or annual intervals. The investment amount can be as low as INR 500 per month. A lump sum investment means putting in one big amount and letting that grow with time.
While both are good, SIPs prove better when markets keep correcting for long. SIPs help buy numerous stocks at lower prices during the market downturn and less at a greater price as markets begin to recover. This keeps the average cost of investments lower for investors. Whereas the ‘Power of Compounding’ feature of SIPs helps raise your money substantially over time.
Gift Your Family a Memorable Trip
The benefit of investing in these high-return products is the convenience you have while ensuring a trip for family members. The costly travel tickets, accommodation expenses and much more can be covered through these investments.
Use Investment Yields for Wedding
Weddings would perhaps occupy much of your attention given the emotions we attach to the event. The long list of guests, jewellery items, food and all that Dhol Nagaade can be out of your reach if you don’t plan your investments properly.
Buy Term Insurance ASAP
Term insurance is one of the best financial gifts you could give to your loved ones as it protects them financially upon your unfortunate demise. So, if you die during the policy term, your family will receive the sum assured you choose while buying term insurance. The disbursal of the sum assured can happen in a lump sum, monthly installment or a combination of the two. Choose carefully from these options as you cannot make alterations to the same later. Check your needs before choosing the option.
The Best Part About Term Insurance is Disclosed Right Below!
It’s the greater coverage that one gets in exchange for the lowest premiums. What’s more, the premiums don’t change once fixed by the insurer. So, if you buy in your early 20s or 30s, you could pay half the premium applicable to someone doing so in their 40s.
Health Insurance – A Superb Financial Gift Given the Times We’re in
The entire world realized the importance of having health insurance in the aftermath of the COVID pandemic as treatment got costlier. Many uninsured could not receive proper treatment and thus left us. Wish they had health insurance to be amongst us today.
See COVID as a test of your life and don’t repeat the mistakes many committed by not having health insurance. But having it adequately is equally important. Don’t choose a very low sum insured that remains irrelevant, in terms of inflation, for the sake of lower premiums.
Healthcare inflation rising annually by some 10-20% will make your health insurance feel negligible! Choose the sum insured wisely while also ensuring the premium remains affordable. As a family man, look for family floater health insurance covering all your dependents under one plan. The premium remains much lower then.