This Christmas Be the Secret Santa for Your Family And Gift a Secure Financial Future

Given the continuous macroeconomic uncertainty and the rising risk of a worldwide recession in 2023, as reported by the IMF and the World Bank, it is prudent to focus on the financial security of your loved ones. This will prepare you for the obstacles that may arise in the coming year. Improving your financial situation in the coming year can help your financial wellbeing and lead to a more secure financial future.

Thus, if you want to level up this Christmas season, put on that red suit, literally or metaphorically, and be your family's Secret Santa and gift them a secure financial future. Instead of the conventional stocking stuffers, choose unique, thoughtful gifts that will bring financial security and be truly valued. This article elucidates a variety of financial gifts that you might love to give your loved ones this holiday season.

1. An Optimal Insurance Cover -

Gifting adequate insurance coverage is also the best way to manage risks and safeguard your family's/loved ones' future. Insurance is the most effective strategy to indemnify your life and health risk. Insurance coverage should be part of your financial plan, especially if your family depends on your income to cover monthly expenses.

Given the rising healthcare costs, gifting health insurance will not only protect the beneficiary but will also provide tax benefits, increasing savings. According to recent headlines, a wave of infections is sweeping through China, raising global pandemic fears. At this moment, it appears unlikely that new covid strains developing from the Chinese wave of infections will have an impact on India. However, the government's caution suggests that there is still a possibility. As a result, optimal insurance coverage in the name of your loved ones or family members would make an excellent financial gift this Christmas.

Indian market currently abounds with options on healthcare plans, with many insurance providers offering family floater healthcare plans specifically designed to include senior family members. Remember that not all insurance policies are the same; check the terms and conditions carefully to ensure the insurance coverage is comprehensive to your needs.

2. Emergency Fund

One of the ways that you can gift yourself and your family real peace of mind in 2023 is by establishing an emergency fund. With the increasing geopolitical concerns and recessionary risks, there is a possibility of a slowdown in economic growth. This may lead to several financial challenges, plus if the inflation keeps rising, the cost of living will be expensive, and it may force many households to allocate more funds for essentials like groceries or gas. Thus, it will be prudent to secure your financial stability with a contingency reserve to sustain in any unforeseen event.

An emergency fund will act as your safety net in an easy-access savings account or liquid funds, which you can dip into when unexpected expenses arise. Having a reserve fund you can access easily if you're in a tight spot means you don't have to resort to expensive borrowing. Even if your source of income is uncertain, this reserve will meet your family's financial needs. Ideally, your emergency fund should hold household expenditures of 12-24 months, including loan EMIs.

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3. Mutual Fund SIP in the Name of Your Loved Ones

In today's environment, where economic uncertainties and inflation is eroding the purchasing power of our hard-earned money, it is essential for you to make productive investments that will potentially clock better inflation-adjusted returns (also known as the real rate of return), are tax-efficient, and enhance the journey of wealth-creation.

A Systematic Investment Plan (SIPs) is the best way to invest in mutual funds. This Christmas, instead of gifting expensive materialistic gifts to your family members, consider investing in a mutual fund SIP in their name. This will be a fantastic monetary gift that will help your loved ones in wealth creation and achieve their financial goals in life. For instance:

• You may draw a SIP in the name of your children targeted towards their higher education or their wedding expenses. Several fund houses have launched mutual fund schemes dedicated to child-related goals like 'Children's Gift Fund'; you may invest in the one suitable for your needs.

• You may consider investing in an SIP in your spouse's name in mutual funds towards retirement planning. This Christmas, gift your spouse a worry-free retirement and the security to ensure that his/her golden years are blissful. Plan for your retirement wisely and choose appropriate investment avenues for the same.

To achieve each goal within the given timeframe, you must estimate the amount of money needed. I recommend PersonalFN's SMART Fund Explorer, which avoids the hassle of selecting mutual funds and helps you plan your mutual fund investments smartly aligned to your financial goals.

4. Gift Gold in a Unique Way

Gold has always been a mark of wealth; it is looked up to as a 'safe haven' in times of economic uncertainties and is an effective portfolio diversifier. Gifting this precious yellow metal will serve as a store of immense value for your loved ones and would be deeply appreciated.

This Christmas, consider gifting gold in a unique way and pick the smart option of investing in Gold ETF and/or a Gold saving fund or Sovereign Gold Bonds in the name of your family member. Investing in Gold ETF and/or a Gold Saving Fund offers the convenience of investing in gold at the prevailing market price without any premiums involved as in case while buying physical gold. You don't need to worry about storage, security, and quality. Do note that over the long term, gold as an asset class has exhibited an uptrend and performed reasonably well, highlighting the importance of owning gold as an investment option.

5. Gift the Weapon of Financial Knowledge

Financial education plays a vital role in everyone's life; it equips your financial awareness to utilise your hard-earned money effectively and make informed financial decisions that can improve your financial health.

This Christmas, consider gifting your loved ones the most precious gift to invest in enhancing their financial knowledge. This will help them understand the nuances of financial planning, hold prudent money management skills, and achieve the envisioned financial objectives. There are several ways to improve your financial literacy, from researching the internet, enrolling in classes, reading financial books, or subscribing to personal finance newsletters.

It is necessary to teach children the nuances of prudent money management at an early age. This would make them understand the value of hard-earned money and not assume it grows on trees. Hence, you may consider gifting your children a few board games associated with money, such as Monopoly, Game of Life (similar to monopoly), Cash flow (inspired by Robert Kiyosaki's Rich Dad, Poor Dad teaches how to be in better control of your finances) etc.

Additionally, you may enrol your family members on an online course that offers you an exclusive opportunity to learn the finer nuances of money management in their comfort.

Let this Christmas of 2022 be the reason for you to play the role of 'Secret Santa' and gift your family/loved ones the present of a financially secure life.

Merry Christmas to all!

PS: We at PersonalFN understand that not everyone is equipped with financial knowledge. Here we encourage you to gain and enhance your financial knowledge and become a 'Financial Guardian' of your family. You will understand the financial planning elements to become your own financial planner.

And in case you are wondering how to become that financial guardian for your family, PersonalFN's latest special initiative, the "Certified Family Guardian," organised into eight modules with 24 extensive videos, will help you with all the relevant tools and learning modules needed to get better at money management. It also offers a host of other benefits to help you make informed investment decisions. Read here for complete details...

So, if you wish to give your loved ones a meaningful financial gift that they will cherish and which helps them secure their financial future, you must enrol with their name for the "Certified Family Guardian" programme today!

Warm Regards,
Mitali Dhoke
Research Analyst