Valentine’s day is close, and everyone is busy thinking about that one perfect gift for the occasion. If you are too, don’t worry, we have a list of pretty much unconventional gifting ideas for you for this Valentine’s day. Forget about the diamonds and gold, they are the assets of old. A 50K that comes back to your Valentine in a few years as 100K is better than any physical asset. Therefore, for those looking for something far more memorable and valuable, here’s a list of ideas you may find attractive:
1. ELSS Mutual Funds
ELSS Mutual Funds (aka Equity Linked Savings Scheme) are equity mutual funds which are tax exempt for investors. For example, if you invest Rs. 50,000 in an ELSS in the financial year 2017-18, you can claim a deduction for the amount under section 80C in your ITR for A.Y. 2018-19. This investment is counted under 80C, thus the usual limit of Rs. 150,000 applies. Also, just to clarify, the new tax rules on equity investments apply only to stock market investments.
The benefit is, while you enjoy the tax exemption of the investment, your partner will receive the following two:
- The growth of Indian Equity Markets
- A tax-free maturity value
Now, this is the best gift for your partner if they have a long-term (say 5 years and beyond) goal to look after.
2. ULIPs from Life Insurers
ULIPs, or Unit Linked Insurance Plans, have been infamous for being expensive and laden with charges in the initial five-year investment period. However, the scenario changed after 2010, and with new regulations, the total expenses that ULIPs will charge will actually be lower than even the ELSS mutual funds. Provided your investment horizon spans more than 10 years, equity fund in ULIPs can actually generate better returns than an ELSS.
Along with the investment value and tax deduction, ULIPs can also provide your partner with additional financial backup in case anything happens to you.
The only challenge with ULIPs is that you need to commit regular investment for long-term. If you opt for a one-time premium payment following two may happen:
- You may not enjoy tax deduction on ULIP investment
- The maturity value will also attract tax to some extent
Thus, if you are planning ULIP as a gift, do that with a long-term regular investment commitment. Minimum advisable investment period is five years. Advisable mode of investment is monthly (close to SIP, and no it does not affect your tax liability).
3. Term Insurance
You may be wondering, “why is the post revolving around insurance?” But it’s not just about insurance, it’s about protecting and gifting something valuable to your valentine. Thus, if you know about term insurance plans, you know, that these are the best fit. Advantages…
- Very low cost
- High protection value
- Regular income pay-out options
Yes, you can now choose to start a regular income for your loved ones, instead of just a lump sum amount. The drawback with lumpsum payments had been that the family will need to find ways to generate income out of it. However, with a regular income secure, they can use the money more efficiently to meet their life goals.
And yes, before you finalise the term plan, don’t forget to opt for some very useful riders. For example:
- Accidental death and disability rider
- Critical illness rider
- Premium Waiver option
4. Health Insurance for Your Valentine
Health insurance plans, once again, offer you a tax deduction, but more importantly, they offer protection. You already know about the rising pollution, health issues and healthcare costs. Health insurance is key to managing your health security. If you have not included your valentine under a plan yet, please do. Their hospital expenses will be as high as they can be for anyone else.
Also, if your valentines this year are your parents, health insurance works for them too. If you pay the premium you can enjoy additional tax saving on your income.
5. Mutual Funds as a Gift to Your Partner
This is for those who have already utilized the complete tax saving limit for the year but can invest more. Mutual funds offer a flexibility of investment and withdrawal, apart from multiple options. Based on your preference you can invest in a debt mutual fund, an equity fund (not ELSS), or a hybrid fund.
Hybrid funds create a flexible mix of debt (bonds and FDs) and equity stocks to give you the best from both. This is the best choice if you are confused between equity and debt.
So, save gold and diamonds for anniversary celebrations, it’s time to punch in some numbers, do some research and gift the financial instruments.
Happy Valentine’s Day!!