Great Financial Gifts That You Can Present To Your Parents
Your parents have tried to give you all the comfort that they could within their means. Now, when they have passed their prime and you have started earning, it’s your time to provide them with care. The best gift that you can gift your parents is your time. For everything else, there are of course financial products. Here, we list a few financial gifts that you can present to your parents.
Your parents are at an age where they are susceptible to many ailments, which may require high expenses and could erode their entire life savings. There are many Mediclaim policies out in the market today for people above the age of 50.
While some policies have an upper limit of 75 years, which could be extended up to 80 years, there are others which have no upper age limit. The sum assured options start as low as Rs. 50,000 and can go up to Rs. 10,00,000. These cover critical illnesses like cancer, renal failure, cardiovascular diseases, accidental injury, knee replacement, renal failure, hepatobiliary disorders, lung diseases, besides others.
Your parents may have spent all their savings and investments on your higher education or your marriage. You can repay them by opening a fixed deposit for them. Some fixed deposits (FDs) allow you a payout on the interest gains on a periodic basis, which could work as a monthly income for your parents. FDs are safe and assure predetermined returns. Bajaj Finance Fixed Deposit gives a high interest-rate of 7.85%. If your parents are above the age of 60, they can get an interest rate of 8.2%. Calculate the gains that your parents can get using the Fixed Deposit Interest Calculator online.
Pradhan Mantri Vaya Vandana Yojana
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) — a pension scheme for senior citizens above the age of 60 — launched last year for one year, has now been extended up to March 31, 2020. You can now invest up to Rs 15 lakh (per family) to help your parents get a monthly income of up to Rs 10,000 per month. The previous investment limit was Rs 7.5 lakh. The scheme has a maturity period of 10 years and guarantees a return of 8% per annul.
PMVVY also allows an early exit under exceptional circumstances like critical/terminal illness. However, only 98% of the money invested will be returned. The pension scheme also provides a loan facility — up to 75% of the investment amount — after the completion of three policy years, at the interest rate of 10% per annum, payable half-yearly for the term of the loan.
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Note that the pension income under PMVVY is taxable.
Senior Citizen Saving Scheme
Senior Citizen Saving Scheme (SCSS) offers a slightly higher regular income than PMVVY. SCSS currently offers an interest rate of 8.3% and is reviewed quarterly by the Reserve Bank of India. The investment amount cannot be more than the retirement benefits received or Rs 15 lakh, whichever is lower. The scheme though encourages people to invest their retirement benefits, but no one is stopping you from matching that amount to present a retirement gift to your parents.
People between the age of 55 and 60 who have opted for voluntary retirement scheme too can invest in the scheme, if they do so within one month of receiving the retirement benefits. The five-year scheme can be extended for another three years.
Systematic withdrawal plans
Some mutual funds come with a systematic withdrawal plan, which can help your parents get a regular income from your investment. In this scheme, you can help your parents choose to withdraw a specific amount, or a set number of units or only the capital gains on the investment on a monthly, quarterly, semi-annually, or on an annual basis. If you opt for a certain amount, the units holding a value equal to the predetermined amount are sold for the payout.
The negative side of redeeming the units and a certain amount payout is that your units keep declining with each withdrawal.
Invest on their behalf in stocks/MFs
While equity markets are soaring high again, you can start investing on your parent’s behalf on stocks and mutual funds and also help them understand the basics of the market if they aren’t aware so that they can also invest their free time and earn money from it.
Also Check: Bajaj Finance Fixed Deposit
About the author
Ankit Srivastava is a Google Certified Sr. Digital Marketing Strategist, Professional Blogger and Entrepreneur from New Delhi. He has already written many articles and blogs on various topics.