We have seen expensive chocolates, flowers, perfumes and ‘dinner for two’ as the usual gift choices on Valentine’s Day. Giving these may get more ‘yawn’ than a ‘wow’ from your girlfriend (or your boyfriend). But, here we are solving your problem of finding an interesting gift for your love.
How about an investment in a mutual fund? For, they can
Be a long-lasting gift,
Show you as a forward-thinking person
Answer the ‘Where is this going’ question
We’ve picked three funds that can suit different romantic tastes for different kinds of people.
Note: This is not an advice but a discussion of interesting gift choices. Your core investment planning should be done systematically after considering your goals, investing time-frame and risk appetite. Also, past returns of mutual funds do not guarantee future performance.
For a trip to Goa – Liquid Funds
If you are saving up for a holiday in Goa next year, you can get a little extra return and convenience by putting your money in a liquid fund instead of a bank FD. Liquid funds allow you to redeem your investment at any time without any ‘premature termination penalty’ as with Fixed Deposits. Some of them are now directly linked to debit cards, allowing you to spend your money on the go. They also do not have TDS deducted from them and can give you a little extra yield over bank FDs.
Aditya Birla Sun Life Floating Rate Fund – Short Term Plan returned a decent 6.84% over the past year. This is a bit more than the 6.25% currently offered by SBI for its one year FD. The main advantage of the fund will be the convenience rather than returns. You will be able to make part withdrawals from it, whenever you want, without paying any premature termination penalty.
Note: Unlike FDs, the returns on liquid funds are not guaranteed.
For a romantic getaway in Paris – Short Term Debt Funds
Short-term debt funds are good vehicles for investment horizons from one to three years. This is also a good time frame for a romantic holiday in Europe. It will allow you to plan and get good deals on flights and hotels. HDFC Regular Savings Fund has returned an annualized 8.49% over the past three years. If you hold for the entirety of this period you will also potentially pay a lower tax rate – 20% with the benefit of indexation. The fund is rated four stars by Value Research and five stars by Morningstar. The fund manager, Anil Bamboli has been in charge since 2004. The fund has an exit load for redemptions before 6 months. Also remember, that interest rate hikes and worsening credit quality can play spoilsport.
If you’re really serious about the long-term – Equity, it is
Equity funds have tremendous compounding potential over the long term (five years or more). Go for these, once you’ve checked your time-frame and ability to stomach volatility (ups and downs in the fund). Gifting this type of fund means that you really are serious about the relationship.
With 10-year annualised returns of 13% and five-year annualized returns of 17%, this fund is one for the keeps. Aditya Birla Sun Life Frontline is a large-cap fund with top holdings in HDFC Bank, ICICI Bank and ITC. It has a five-star rating from Morningstar and a four-star rating from Value Research which means it has attained a level of consistency in performance. The fund manager, Mahesh Patil has been at the helm since as far back as 2005.
Post Script: You cannot actually gift mutual fund units. Mutual Funds can have joint holders in which the signatures of both persons is required for additional purchase or redemption. However having a non-family member as a joint holder can have regulatory and tax implications, so you might not want to do this with a girlfriend or boyfriend.
Alternatively, funds also have nominees who are entitled to receive the fund units on the death of the investor. However, nominees are not heirs and they only hold units on behalf of the heirs until the succession is settled.
It may be best to keep the units in your name and use the returns to do the fun stuff with your girlfriend or boyfriend. It is, after all, the thought that counts.