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What is Your Idea of Showing love this Valentine's Day?

What is Your Idea of Showing love this Valentine's Day?

Feb 14, 2019
4 mins | Views 6285

We all have played this classic mind-boggling game of What to gift your spouse on Valentine’s Day or Anniversary or Birthday? Well, at least a few of us who are romantically-inclined are often searching for a reason to gift. So what's your choice for V-day? Maybe you thought about a quick, luxurious getaway or a piece of fine jewellery, or just a simple dinner date.

They say ‘Money can't buy happiness’, but a sweet gesture could bring lots of happiness. The fact that you remember special occasions for your loved ones (maybe spouse, kid, parent, or loved friend) would make them feel valued and happy. You may choose not to look at the materialism behind these gifts, as money is no comparison to love. And today, we are certainly talking about 'love.'

Spend or Park?

How about looking for a long-term gift this time? Rather than spending your money this Valentine’s, you can park it. Yes, this may sound a little dull and boring. But not when the parked money earns a return. Instead of focusing on the one-time gift that you could give your spouse during special months, you could invest that money in a Mutual Fund or Systematic Investment Plan (SIP) for few years and aim to fulfil you dream.

For example; if you invest Rs.5000 each month via SIP in an equity mutual fund, you will have a corpus of approximately Rs.4.1 lacs at the end of five years, assuming an average rate of return of 12%. This amount could aid your bigger aspirations. How about travelling? Does that set your eyeballs rolling? Exploring new places with loved ones could surely be a great gifting idea, and all millennials would agree to it.

Money is no alternative to the love and compassion that you could give your spouse/family/friend. However, some wise decisions made with money could surely act as a cushion for their wellbeing. Let us look at a few investing options this season.

The most important consideration here is that you need to match your needs with a wide range of options available. Mutual fund is undoubtedly a vast land of diversity, and it is crucial that you choose your area wisely. Some of the broader categories for investment include:

Liquid funds- This category is beneficial if you want to build a buffer for emergencies. These funds mostly include debt and money market instruments that can be en-cashed easily. The Net Asset Value or NAV of the fund is calculated on the basis of 365 days, while other funds calculate for business days only.

Equity oriented Funds- This category will suit you if your risk appetite is high. The returns can also be higher as it invests in equities that have higher growth potential. It is always recommended to have a longer-term horizon when investing in equity oriented funds.

Debt Funds - It invests in debt securities and offers tax benefits with indexation if held for more than three years. If you have a low-risk appetite or investing for short term, it could be a good option for you.

Hybrid funds - It invests in debt as well as equity securities. The ratio of investment could be fixed, such as 60% debt 40% equity or variable. It is suitable if you want to earn a higher return but keep the variability of the overall investment lower. The debt portion provides income stability, while equity helps in making an alpha return.

You can invest in these funds via Systematic Investment Plan (SIP). SIPs provide an option of investing a stipulated amount of your choice either each week or month or any chosen periodic date in any scheme of your choice, it could be equity oriented, debt oriented or hybrid. It encourages you to save money at regular intervals.

Mutual fund investing is subject to market risks. And yes, it is also subject to a risk that if you cut down on your always-one-time gifts, your spouse may get a little upset with you. But as we always say, do not underestimate the power of long-term investing and compounding returns.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

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