Introduce your mothers to some new-age financial habits that will not only make life easier for them, but open up opportunities to earn better returns on their investments.
Mothers have always taught us the best lessons in finance, right from encouraging us to save our pocket money to saving up every month for that big family house. It’s time we gave them back in our little ways. Introduce them to some new-age financial habits that will not only make life easier for them, but open up opportunities to earn better returns on their investments.
1. Using Digital Platforms
It can be challenging to get your mother savvy with digital platforms or even making her trust it with money matters. But it definitely needs to start somewhere. You can help your mother learn not just to use net banking and digital wallet transactions, but also to use eKYC to start investing online. Start with something small like SIPs for mutual funds or a PPF online account, and show her how she can make contributions every month, without having to visit the bank or meeting any representatives.
2. Avoid Buying Physical Gold
People have always had the fascination for the yellow metal, but given the current market scenario around returns on physical gold, it is best to look for an alternative avenue for investment. Gold ETF is one such option. With the jewellers eating into a large pie of the selling price of gold, it may not reap any profit to the seller.
3. New Age Investments
Fixed Deposits may still be a favourite investment choice of the older generation, but introduce your mother to some new-age investment schemes to earn better returns. Following are some options to explore.
# Mutual Funds: Investing in mutual funds, especially ELSS schemes, will not just accrue better interest, but also save taxes under Section 80C of the IT Act up to Rs 1,50,000. Although investment in mutual funds comes with moderate to high risk, the average return can range anywhere between 10% and 15%. If she doesn’t want to risk a big sum right away, start with monthly SIPs, and gradually increase the contribution.
# Gold ETF: The scheme involves buying gold-backed Exchange Traded Fund (ETFs). The price of gold ETFs moves based on the market value of gold. Traded freely in the market, these funds are managed by professional fund managers and may entail a management cost as well as brokerage cost. ETFs can be sold at any time.
The price at which ETFs are traded at is much close to the actual price of 24K gold as opposed to the gold jewellery in India which is mostly made with 22K gold.
4. Medical Insurance
Health insurance may not be a return generating investment, but it is a must have, as in times of emergency it helps protect your existing savings and investments. Medical insurance takes care of all hospitalization expenses during a medical emergency or chronic condition for that matter.