From Gold Bonds to Pension Plans, meaningful financial gift ideas for Mother’s Day 2023

If our parents hadn’t struggled to cater to our financial needs, could any of us have made it this far? Raising a child has never been financially smooth but aiding oneself with growing age can be even harder. However, now as we have adequately grasped the handle of independence, it’s high time we return the favour this Mother’s Day! 

Here is a list of meaningful Mother’s Day Finance Gifts that you can give your mom to help her in her journey with money.

Health insurance 

Unforeseen medical conditions and sudden health problems are something that scares us all, especially when it comes to our loved ones. Having health insurance in this day and age is a must to avoid the medical expenses that come along with it. Health insurance would be a perfect present for your mom this Mother’s day! 

There are multiple ways to purchase a health insurance policy. 

• From an insurance company 
• Through an insurance agent
• Purchase a health insurance gift card wherein the recipient can choose their own policy and coverage options

It is advisable to carefully examine the policies and their terms and conditions before making the purchase. To find the most suitable plan for your mother’s requirements, it is recommended that you compare different policies based on their age limit, coverage, and network hospitals.

Also Read: What should women borrowers do to build and maintain a high CIBIL credit score?

Stock investments 

While stocks are subject to risk, gifting stocks is great long-term financial support as long as your mom is risk-friendly. Today there are multiple brokerage firms through which you can buy stocks. Both the giver and recipient should have an account. Once you buy the stocks, you can transfer them to your mother’s account. Although, it is important to choose the right account. 

Following are some examples: 

• Brokerage accounts
• Individual retirement accounts (IRAs)
• Trust accounts
• Demat accounts 
• Blue-chip account 

Always thoroughly research and analyze companies’ financial performance before investing in stocks to ensure profitable returns. Gifting stocks may also have tax implications for both the giver and the recipient, subject to gifting stocks and capital gains tax. 

Therefore, it is necessary to keep and provide all the relevant documents so you and your mom can refer to them at any time when required. Consider contacting your broker or financial advisor for making informed decisions and for a smooth process of transferring stocks as a gift.

Most importantly, when gifting stock investments, consider informing and educating your mother about the investment. It is essential that she’s aware of the risk factors as well as the benefits, and also understand the data to make informed decisions to buy and sell stocks. 

Overall, gifting stocks are a great investment to boost financing if one is risk tolerant and is well-versed in the stock market. 

Also Read: Mother’s Day 2023: How and why of retirement planning for working mothers – Explained

Recurring Deposits (RDs)

Alternatively, if your mothers like to keep it safe, RD is the answer as it’s a safe and steady investment option. RDs often come with a fixed interest rate for a fixed tenure wherein the shorter duration usually offers lower interest rates and the longer duration offers higher interest rates. It’s also quick and hassle-free to apply for in this new age of net banking. 

There are multiple RD plans that you choose from. Following are some examples: 

• Regular Recurring Deposits
• Flexi Recurring Deposits
• Variable Recurring Deposits
• Step-up Recurring Deposits
• Step-down Recurring Deposits
• Senior Citizen Recurring Deposits
• NRI Recurring Deposits

Before gifting RDs to your mothers, it is crucial to consider some important factors. Firstly, you should compare the interest rates offered by different banks to ensure that you make an informed decision. Secondly, you must ensure that the minimum deposit amount aligns with your parents’ financial requirements. 

Thirdly, it’s important to be aware that RDs may charge a penalty for any withdrawals before maturity, so you should ensure that your parents are comfortable with the tenure. Lastly, you should keep in mind that Tax Deducted at Source (TDS) applies to the interest earned on RDs if it exceeds INR 10,000 in a financial year. 

Overall, gifting RDs is a safe and steady investment option with a fixed interest rate.

Gold Bond 

While Gold is one of the most precious and sacred metals in Indian households, with rising crime over the past few decades, there is always a sense of risk that is now associated with storing precious metals. Therefore, go for gold bonds this Mother’s Day! 

Gold bonds are in a dematerialized form and can be held in a Demat account as well. Best part I that they’re easy to store and transfer. Moreover, like any other security, they can be traded on stock exchanges as well! When gifting gold bonds, you can simply purchase them in your mother’s name and have them delivered to her Demat account. You can also gift them in physical form by providing a gift certificate that can be redeemed for gold bonds. 

Gold bonds are issued by the Government of India and can be purchased from banks or financial institutions. The interest rate on gold bonds is fixed at 2.5% per annum, payable semi-annually. They have a fixed tenor of 8 years with an exit option after the fifth year. This allows investors to redeem their bonds in cash on the next interest payment date. 

The biggest benefit of gifting a Gold bond is perhaps that it is tax-efficient. They come with an exemption from capital gains tax on redemption and indexation benefits for long-term capital gains.

However, keep in mind that Gold bonds are also subject to risk therefore it is suggested to consult with a financial advisor to understand the involved benefits and risk factors before making the purchase. 

Annuity plans

Offered by life insurance companies, annuity plans are pension plans that are designed to provide regular income during the retirement period.

There are various Annuity plans that one can choose from:

• Immediate Annuity Plan
• Deferred Annuity Plan
• Fixed Annuity Plan
• Variable Annuity Plan
• Pension Plans

It is important to choose the Annuity plans based on your mother’s requirements and needs post-retirement to best support them in this new phase of life.

Moreover, do your research and compare insurance companies before settling for an annuity plan that is best for your mother’s requirements. 

Perhaps the best benefit is that annuity plans come with tax benefits varying from the individual’s age and annual income. For more details, consult with a taxation advisor for tax benefits and implications.

Ultimately, gifting an annuity plan is a meaningful way of supporting your mom in her retirement years.

To conclude, providing monetary gifts is a wonderful way of expressing love and providing support for your mothers, which can help them attain financial security during their retirement period. However, it’s crucial to select a gift that aligns with their needs and preferences. 

If you require assistance in making a decision, feel free to contact us via email or phone, and our financial advisors will be happy to assist you.

The author of this column is CA Ruchika Bhagat, MD, Neeraj Bhagat & Co

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of http://www.financialexpress.com)