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Business News/ Money / Personal Finance/  Invest in mom's future: 5 best financial gifts for Mother's Day

Invest in mom's future: 5 best financial gifts for Mother's Day

Consider giving your mother a financial gift this Mother's Day to empower her financially and provide long-term security. Options include opening a savings account, starting a fixed deposit, investing in gold mutual funds, or building a retirement fund through SIPs.

On Mother's Day, gift your mother financial security and empowerment Premium
On Mother's Day, gift your mother financial security and empowerment

For Mother's Day, many people often scratch their heads over what to gift their mother. The usual traditional gifts include taking her out for dinner with family, a dress, personal accessories, flowers, chocolates, etc. On this Mother's Day, do something different. Give your mother a financial gift that will grow in value over a period of time and help her in times of need. In this article, we will discuss some of the best financial gifts for your mother.

Financial gifts will help improve your mother's financial well-being in the long run. Apart from providing financial security, these gifts will empower your mother. The financial gift to be given depends on whether your mother is a regular investor or just starting her financial journey.

Some of the best financial gifts you can give your mother on this Mother’s Day include the following.

Savings account

Does your mother save some cash from the monthly budget? If yes, you can open a savings account for your mother. She can deposit the monthly savings in that account. A savings account comes with a number of features like deposits and withdrawals at any time, quarterly/monthly interest on the balance maintained, a debit card for ATM withdrawals, swiping at merchant locations, online transactions, etc. Usually, banks pay an interest rate in the 2% to 7% range, depending on the balance maintained.

Apart from banks, a savings account can also be opened with a post office. The interest rate payable is 4% p.a., and the minimum amount for account opening is Rs. 500.

Fixed deposit

In the earlier section, we saw how you can open a savings account for your mother where she can deposit her monthly savings. If your mother has already accumulated a substantial amount of cash or account balance in her savings account, you can open a fixed deposit for her.

As of May 2024, the interest rates offered on fixed deposits are at multi-year highs. Most banks are offering interest rates in the 7-8% p.a. range. Some small finance banks are offering interest rates in the 8-9% p.a. range. There are good interest rates, higher than the inflation rate. Your mother can get the additional benefit of 0.25% to 1% if she is a senior citizen.

If your mother is a senior citizen, you can consider opening an account under the Senior Citizens Savings Scheme (SCSS) for her. It has a tenure of five years, and the current interest rate payable is 8.2% p.a. On maturity, the account can be extended for another three years. The interest rate is announced for every quarter before the start of the quarter. For example, the interest rate applicable for the quarter from 1st April 2024 to 30th June 2024 is 8.2% p.a.

The SCSS pays out interest quarterly. Thus, it can create a steady income stream for your mother.

Gold mutual fund SIP

If your mother loves accumulating gold regularly with her savings, you can start a systematic investment plan (SIP) in a gold mutual fund. With a monthly SIP, she can contribute a specified amount on a specified date every month for a specified period. She will benefit from the upside in gold prices during the investment period.

Gold mutual funds take care of purity, storage, insurance, etc., without additional costs for the investors. She can redeem the gold mutual fund units whenever she wants to buy physical gold. With the redemption proceeds, she can buy her favourite gold jewellery.

Building a retirement fund

A retirement fund gives financial freedom during the golden years. You can start an SIP for your mother to build a retirement fund. If the investment time horizon is more than seven years, you can choose an equity fund for investment. You can look at diversified market capitalisation funds like large and mid-cap funds.

If the investment time horizon is five to seven years, you can look at hybrid funds. For an investment time horizon lower than five years, you may look at a debt fund. Being ready with a retirement fund for the later years of life will give her much-needed peace of mind.

In the long run, equity investments can benefit from the power of compounding and create wealth for your mother. During the retirement years, the corpus can be invested in fixed-income instruments to generate a regular monthly/quarterly income stream.

Financial literacy

Along with any of the above financial gifts, you can also add the gift of financial literacy for your mother. Financial literacy can help your mother manage her investments on her own. There are a lot of websites, TV channels, magazines, books, etc., that talk about financial literacy. One of the books that you can consider gifting your mother is: “What Every Indian Should Know Before Investing" by Vinod Pottayil. The book gives detailed information on all the major investment options available in India in a simple language that every investor can understand.

Before you invest in any financial product for your mother, sit with her and explain the features and benefits to her. Investing is not a one-time process. If the contributions have to be made monthly, explain the process to her so she can take over after the initial investment. Show her how to track the progress from time to time.

For example, if you are starting a SIP, walk your mother through the process of doing the initial set-up, tracking the regular monthly investments, reviewing the scheme performance every six to twelve months, and how to redeem. For equity funds, encourage her to stay invested for the long term to enjoy its benefits in future. Investments like monthly SIPs instil the discipline of regular investments for the long term.

This Mother’s Day, give her a gift of financial empowerment. You may have given various gifts to your mother every year. However, this year, gift her something that will provide financial security and empower her to build a brighter tomorrow. You can express your love and gratitude towards your mother with a financial gift. At the same time, you can help her accelerate her financial freedom journey with a financial gift.

Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.



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Published: 12 May 2024, 10:19 AM IST
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