A gift is an offer made by a person to another. It can be anything, even a transfer of an asset that has value in use. Financial gifts are offering money or any assets from one person to another which have a good value and are expected to give more benefits and monetary returns in the future.
Here in this article, we provide you with a list of financial gifts that you can offer your loved ones.
- Health Insurance
- Fixed Deposit
- Mutual funds
- Gold investments
- Pay-off debt
1. Health Insurance
Health Insurance is one of the best financial gifts that you can give to anyone. During this pandemic situation, health emergencies are increasingly growing day by day. Having Health Insurance provides your financial and psychological support. The advancement in medical science has increased life expectancy and medical expenses have increased drastically. If you provide Health Insurance to anyone they will be very much delighted. The hospitalization and the medical expenses will be covered under the health insurance. Having health insurance ensures that your savings are safe and you get the best medical care.
2. Fixed Deposits
Fixed deposit is also called Term deposit. Fixed deposit is one of the safest investments if you give fixed deposit as a financial gift to someone, they can be benefited with the interest on fixed deposit amount. The term deposit can be opened for any number of days according to your requirement with the term deposits can be opened from 7 days to 2-5 years according to your requirement.
You can contact bank officials for more information on term deposits. You can put a lump sum amount in the name of the recipient as a fixed deposit and it will yield the best returns on investment.
If you want to provide short term benefits then you can select the period of your term deposit. You can also select interest payout monthly, quarterly or yearly. You also have the option of accumulating the interest and receiving it at the end of the term period.
Instead of gifting money and asking them to put it in a savings account, if you create a fixed deposit and give it to them, it will provide more returns on investment than on savings.
In times of emergency, a fixed deposit can be closed prematurely and the money can come handy. Also, a fixed deposit account can be opened in minutes.
You also have another option similar to fixed deposit called Recurring Deposit. You can open Recurring deposit and provide it as a financial gift. There is a difference between fixed deposit and recurring deposit. In fixed deposit, a lump sum amount is used to set up. In Recurring deposit, every month A certain amount of money is automatically deposited from savings account to Recurring deposit account. Recurring deposit also provides interest similar to fixed deposit. Be smart and select the best bank so that your deposits give you the best returns.
Click here to know Why fixed deposits are safest investment options?
3. Mutual fund
You can invest in productive investment avenues and give it to someone you want. By doing this you are increasing their financial wellbeing. In the long run, mutual funds will yield the best financial result. You will be happy in fulfilling your loved ones financial goals. They Provide the facility to invest in different ways in equity and debt markets.
Mutual funds offer Diversification of your investment. The portfolio is Professionally managed by fund managers who have wide experience in investment portfolio. You can begin investing as low as AED 500 investment into mutual funds. It can also be gifted to children where parents stand as guardians.
Systematic Investment Plan (SIP) is a best method of investment each month as your money gets partially invested instead of lumpsum amount. You can make a financial gift and give it to someone. You should monthly contribute to the Systematic Investment Plan and the beneficiary will enjoy the returns.
4. Gold Investment
Gold is considered as a wealth and it looks as a safe investment option during economic challenges. It is an effective diversifier which has value in use and value in exchange. For some people gold is just not a metal they have some emotional attachment to it.
If you give gold as a financial gift then it will create a good relationship. The person receiving the gold as a financial gift can benefit with the metal as it is a valuable asset.
During the global crisis the value of gold has increased highly and it is a shield to protect against inflation. Financial gift of gold can be done by issuing physical gold in the form of gold coins, jewellery or gold bars.
Gold investment can be also done through Gold ETFs, gold bonds or through the gold savings fund. Investment can also be made through stocks of gold mining companies, directly or through gold funds which are offered by mutual funds. You should remember that gold stocks are more volatile than gold prices.
The yellow metal is much more popular than any other metal not only in the UAE but across the world. Gold from an investment perspective is a good option as the price of gold has increased more than 346% in the past 20 years.
Click here for Different ways to invest in Gold
5. Payoff debt
One of the best financial gifts that you can give is to pay off someone’s liabilities. This gift cannot be given unless the person is a friend or family member or someone close to you. If the person is in financial burden then you can reduce the burden by paying off the debt. This gift is an unforgettable gift and brings huge relief for someone whom you offer this gift.
By clearing the debt you will save a lot of money in the form of interest payments and also improve the quality of life of your loved ones. If you are paying off a loan or credit card debt then you are not only reducing financial burden but also improving the credit score. Paying off debt of your loved ones will help them in restructuring liabilities. In the long term your relationships will build strong and it creates financial wellbeing.
Conclusion
Financial gifts have different values with respect to the age group you give them to. If they are given to children they will understand the value of money, see their investment grow and learn important financial lessons whereas young people can meet their financial goals. If you give to old age people, they will get financial support in their old age. The most important thing is what gift you are gifting and what benefits you are expecting them to enjoy. Give the best financial gift that your loved ones will benefit from the gift.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
