Raksha Bandhan: From rakhis to returns—How financial gifts can shape a secure tomorrow

In the rich tapestry 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, stands as a testament to the enduring power of familial ties—a practice unique to India.

Reimagining traditional gifts

While traditional customs involve exchanging gifts and tying the rakhi, this is also an ideal moment to consider a gift with lasting significance. Although Dairy Milk chocolates have become a cherished tradition, it's time to think beyond temporary delights and focus on the true essence of the occasion: 'Protection'. One key aspect of this protection is financial security.

Do traditional gifts still hold value in today's modern world? Absolutely! They carry emotions and love. However, what if we could make the gift even more valuable? Why not choose something that not only conveys affection but also demonstrates care?

In the modern era of gifting, I suggest something that adds lasting value to your sibling's life and strengthens your bond over time: 'Long-term financial well-being'. This isn’t just advice from a fintech enthusiast but an insight from someone who has seen the regret of not understanding financial security sooner. Long-term financial well-being isn't about immediate gratification like chocolates or clothes; it's about securing a stable financial future.

The power of compounding: An illustrative example

By giving your siblings meaningful financial gifts, you're equipping them with the tools to manage their financial journey, make informed decisions, and build a solid foundation for themselves and their future families. In this age of financial awareness, these financial presents show genuine love and care by ensuring financial security.

“Financial Security", "Investments”, “Informed Decisions”, “Long-Term” - These financial terms might seem daunting and sometimes dull, but let's put them into perspective with numbers. Here's where it gets exciting. Let me explain it by an illustration:

Many Asset Management Companies (AMCs) estimate an average 12% return on mutual funds. Imagine gifting your sibling a monthly SIP (Systematic Investment Plan) of Rs. 1,000. In the first year, this amounts to Rs. 12,000, which grows to about Rs. 13,440 at a 12% XIRR (Extended Internal Rate of Return).

After a decade, with Rs. 1,20,000 invested, the portfolio could grow to Rs. 2,87,000, a difference of Rs. 1,67,000. Let’s fast forward 30 years, and the returns are ₹57,40,000* from an investment of just ₹3,60,000, a difference of 53,80,000. Let that sink in for a moment. This is the power of compounding, where small investments could grow significantly, securing future generations.

Note: This is just an illustration to showcase how the power of compounding works and the amount shown are part of the illustration only and should not be interpreted as a guaranteed amount.

I hope this illustrates how mutual funds can impact your sibling’s 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 starting a SIP might be the first step toward discovering and understanding all future possibilities. The beauty of giving thoughtful financial presents on Raksha Bandhan lies in combining emotional value with financial wisdom. You're not only expressing love and care but also providing the tools to shape a secure financial future.

In this evolving era of gift-giving, let's appreciate the significance of meaningful financial presents. 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 present that lasts a lifetime and beyond.

Girirajan Murugan, CEO, FundsIndia