In the rich fabric of Indian culture, festivals are like skilled artisans weaving threads of heritage and emotion to bring families together. Raksha Bandhan, a festival celebrating the special bond between siblings, is a testament to the enduring power of family ties – a custom unique to India.
Reinterpreting traditional gifts
While traditional customs include exchanging gifts and tying the Rakhi, this is also an ideal time to think about a gift with lasting meaning. Although Dairy Milk chocolate has become a cherished tradition, it is time to think beyond temporary pleasures and focus on the true essence of the occasion: ‘protection’. An important aspect of this protection is financial security.
Do traditional gifts still have value in today’s modern world? Absolutely! They convey feelings and love. But what if we could make the gift even more valuable? Why not choose something that not only expresses affection but also demonstrates care?
In the modern age of gift-giving, I suggest something that will add lasting value to your sibling’s life and strengthen your bond over time: “Long-term financial well-being.” This isn’t just the advice of a fintech enthusiast, but the insight of someone who has experienced the regret of not understanding financial security sooner. Long-term financial well-being isn’t about instant gratification like chocolate or clothes; it’s about securing a stable financial future.
The power of compound interest: A clear example
By giving your siblings meaningful financial gifts, you give them the tools to manage their financial situation, make informed decisions, and build a solid foundation for themselves and their future families. In this age of financial awareness, these financial gifts show genuine love and care by ensuring financial security.
“Financial security,” “investments,” “informed decisions,” “long-term” – these financial terms may seem daunting and sometimes boring, but let’s put them in perspective with numbers. Now it gets exciting. Let me explain with an illustration:
Many asset management companies (AMCs) estimate the average return on mutual funds to be 12%. Imagine you give your sibling a monthly SIP (Systematic Investment Plan) of Rs 1 lakh. In the first year, that is Rs 12 lakh, which grows to about Rs 13,440 at an XIRR (Extended Internal Rate of Return) of 12%.
After a decade, with an investment of Rs 120,000, the portfolio could grow to Rs 287,000, a difference of Rs 167,000. Fast forward 30 years and the returns are ₹57,40,000* from an investment of only ₹3,60,000, a difference of 5,380,000. Let that sink in for a moment. This is the power of compound interest where small investments can grow significantly, securing future generations.
note: This is just an illustration to show how compound interest works. The amount shown is just part of the illustration and should not be interpreted as a guaranteed amount.
I hope this illustrates how mutual funds can impact your siblings’ investments over the long term.
Is this the only “long-term financial well-being” gift you can give your sibling? Certainly not. There are numerous options to explore, but opening a SIP could be the first step to discovering and understanding all the future possibilities. The beauty of giving thoughtful financial gifts on Raksha Bandhan is in combining emotional value with financial wisdom. Not only do they express love and care, but they also provide the tools to create a secure financial future.
In this evolving era of gift-giving, we should appreciate the importance of meaningful financial gifts. Whether it’s investments that lead to financial stability or creating a lasting legacy, these gifts empower your siblings to take control of their finances. This Raksha Bandhan, consider giving the gift of financial well-being – a gift that will last a lifetime and beyond.
Girirajan Murugan, CEO, FundsIndia
