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Mother's Day 2022: The gift of Mutual Funds

26 Apr 2022 0 COMMENT

Introduction

A famous Jewish proverb goes – A mother understands what a child does not say. In your later years in life, the roles must be reversed. You need to understand your mother's needs and provide for her. This Mother's Day, decide to invest in your mother's financial security by gifting her a mutual fund investment. 

What is a Mutual Fund? 

A mutual fund is a financial product that pools investments from different investors into market securities such as equities, bonds, money market instruments, etc. Mutual funds provide the opportunity for long-term wealth creation, making them great gifts for anyone who wishes to provide financial security to another individual. 

Why give Mutual Fund investment as gifts?

1. They provide compounding returns 

Unlike material gifts, financial gifts most often appreciate over time. Mutual funds have the power of compounding, which means that the invested value multiplies over time, including the returns earned. This means that an amount gifted today will be worth much more in the future, making it a great gift of financial security for your mother. 

2. Long-term wealth generation

The power of compounding adds up to create a sizeable corpus over time. When you compare mutual fund investment plans to other financial instruments such as fixed deposits and gold, they provide higher returns. If your mother is nearing retirement or is already retired, this gift can secure her retirement years. 

Additional read: Investing in mutual funds? Here's all you need to know

3. Easy liquidity 

You can redeem mutual fund units of most of the funds at any time. They are one of the most liquid financial instruments. When you gift your mother mutual funds, she can sell the units at her convenient time and use the proceeds as she pleases. Much better than a watch or a laptop, don't you think?

4. Multiple ways of investing 

Investments in mutual funds can be made in lumpsum or in periodic instalments through the Systematic Investment Plan (SIP) route. The latter strategy is ideal if you don't have much cash in hand at the moment to buy a Mother's Day gift. With as little as Rs. 100 per month, you can continue to add to the corpus over time and give her a hefty sum in the future. 

5. Various options to choose from 

There are different kinds of mutual funds that you can invest in. You can invest in debt mutual funds if you want relatively stable returns. If you want the money to grow more aggressively, you can invest in equity mutual funds. Your mother's financial security is strengthened with this gift, no matter what kind of mutual fund you choose. 

How to gift a Mutual Fund investment for Mother's Day?

Unlike stocks, you cannot buy mutual fund investment plans in someone else's name. The only way to do it is to purchase units in your name and sell it when the time comes and transfer the corpus to other person. Otherwise, you can transfer the money to your mother and invest it through her account. 

Conclusion 

Mutual fund investment plans make generous gifts for anyone. Giving your mother this on Mother's Day will ensure her financial security and make sure her retirement years are comfortable. However, before investing in mutual funds, make sure to read the offer documents carefully and check all details to ensure they match her needs. 

Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanismPlease note that Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. I-Sec does not assure that the fund's objective will be achieved. Please note. NAV of the schemes may go up or down depending upon the factors and forces affecting the securities markets. Information mentioned herein is not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. Investors should consult their financial advisers if in doubt about whether the product is suitable for them.Any dispute relating to non-broking products / services like Mutual Funds would not have access to Exchange investor redressal or Arbitration mechanism.