Summary of this article
Tailor financial gifts to your sibling's risk comfort and goals.
Select appropriate options spanning mutual funds, deposits, stocks, or gold.
Ensure health policies or investments do not create recurring liabilities.
Bhai Dooj is traditionally celebrated with sweets and gifts for siblings. However, in order to make the occasion more meaningful, one can think about giving a financial gift that helps the brother or sister to save and invest.
The right choice depends on your sibling's age, financial goals and comfort with risk. Here are five options to consider.
Mutual Fund SIPs
A mutual fund systematic investment plan (SIP) can be a suitable gift for a sibling who wants to invest regularly and build wealth over the long term. You can gift money that they can use to start or contribute towards an SIP in a mutual fund suited to their goals.
Vishal Dhawan, Founder and CEO of Plan Ahead Wealth Advisors Pvt. Ltd., says, "Younger siblings with long investment horizons benefit from compounding assets like index fund SIPs, whereas those with short-term goals (under three years) need the capital safety of fixed-income instruments. Check their comfort with market volatility to avoid gifting an asset that causes financial anxiety."
Fixed Deposits
If your siblings desire a product which gives guaranteed returns and they do not wish to take any risk, a fixed deposit could be an ideal choice for them. Fixed deposit would be suitable even if they are saving money for spending it in the coming few years.
Stocks
For a sibling who follows the stock market and understands how companies perform, gifting shares could be an option. However, direct equity investments carry market risk and may not suit someone who is uncomfortable with price fluctuations.
Dhawan says, "Direct stocks to suit market savvy siblings who are comfortable in analysing company fundamentals and handling volatility."
Gold
Gold can be gifted through coins, bars or Gold ETFs. Hallmarked gold bullion coins provide a conventional way of presenting gifts, whereas Gold ETFs enable the siblings to invest in gold without having to keep physical gold. This would be based on the preference of the recipient.
Health Insurance
A health insurance policy can be a financial protection gift, helping a sibling manage eligible medical expenses. Before purchasing one, check the policy's coverage, exclusions, waiting periods and rules on who can pay the premium.
What To Keep In Mind While Gifting Financial Products
Dhawan cautions against choosing products that may create a financial burden for the recipient. He says, "Avoid burdening your sibling with recurring liabilities or administrative confusion. Avoid gifting insurance-investment hybrids like ULIPs where you only pay the first premium, as this forces mandatory annual payments onto the recipient."
He added that while gifts between siblings are tax-exempt, capital gains tax applies upon eventual sale. He also advised sharing original purchase statements, as the donor's cost basis and holding period carry forward.
