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Our Dads Have Been Our First Financial Adviser, Now It’s Time To Repay

Here are some recommendations to your father to make his life hassle-free as he grows older:

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Growing up, our Dads have played a profound role in shaping our financial habits; so much so that being well into our adult lives, he is most likely still the first person we reach out to for any financial advice and assistance. The best of the financial gyan came from him, be it a money management hack or an investment tip that you swear by now or a lifesaving savings plan that ensured you aren’t broke by the end of each month. Our Dads have always helped us stay on the right financial path, but it’s possible that our very own financial guru may not be keeping pace with the latest changes and trends of the financial world. So, this Father’s Day, lets reprise the role of a guide and mentor for a change and explain to our original guide how investment and savings methods have evolved; help him adapt to latest technological evolutions and advise him on trying new age financial products that will be better suited for him.

Here are some recommendations to your father to make his life hassle-free as he grows older:

ULIPS: If your Father belongs to the salaried segment of the society, he must be concerned about the lack of post-retirement guaranteed pension that promises guaranteed returns. Baring the Armed forces and Central government employees, who will get the benefit of a definite pension, majority population of the country will fail to secure a post-retirement pension. To relive your father from any unnecessary anxiety about financial support or stability post his retirement, advise him to invest in ULIP plans, which are being offered by many prominent insurers in the country. Post his retirement these plans will help him lead a comfortable life without worrying about handling medical expenses that may occur in old age, paying for his dream trip that he had been planning for or being stress free about the wellbeing and safety of his family after him. As per his needs he can choose from a wide range of ULIP plans available in the market such as Single Premium plans, Endowment plans, Pure Pension plans, Annuity plans etc.  

ELSS: Chances are your father still prefers long-term tax saving financial instruments like FD, PPF or NSC over a short-term investment product like Equity Linked Savings Schemes (ELSS). This could be because he considers FD or PPF as less volatile and lower risk investments compared to equity funds like ELSS. However, investing in ELSS can be more viable as it has the lowest lock-in period of 3 years, it is diversified, it offers higher returns and tax benefits in comparison to the older investment instruments. The power of compounding will essentially help him multiply the principal amount and earn him far more impressive returns.

Comprehensive Health Insurance Coverage: Considering how the rate of inflation is always on a rise rendering medical treatments for any illness extremely expensive. There is a significant need for a wholesome health coverage. To avoid depleting all his savings in case of a medical emergency, recommend to your father to take a health insurance cover. In case he already has a health cover suggest him to top up his current Health Insurance and go for a higher coverage. Apart from getting a quality medical treatment, the health cover will also help him enjoy tax benefits under Sec 80D of the Income Tax.  If you are paying for your father’s insurance premiums or in case your father is a dependent senior citizen and you are paying for his treatment, then even you can claim the exemption and avail these benefits.

Credit Cards: To ensure that your father is equipped to handle any unforeseen emergencies or any unexpected financial crisis, recommend that he gets a Credit Card. He may have concerns about using credit cards but explain to him how it can be a great financial tool when used responsibly. If he makes on-time monthly bill payments he won’t accrue any additional interest on his spends, conscientious use of credit card over a time will build his credit history and qualify him for better interest rates and other forms of credit facilities. Apart from being a convenient and safe tool, Credit Cards can help him save through discounts, cash backs and reward points on his everyday purchases and protect these purchases in case of theft or damage.

Debt reduction: As simple suggests it's better to pay off your debts before saving for your retirement. If you're paying more interest than you're earning in interest, you're losing money. So, in case your father is still paying EMIs for a loan, advise him to try and pre-pay the amount so he can avoid the stress of carrying the burden of loan repayment for the entire tenure and be done with the borrowed money sooner. 

Travel Insurance: Instead of gifting him a boring leather wallet or a regular white crisp shirt, plan to surprise your father with all expenses paid international holiday trip that he may have always wanted but could never really take. But to ensure that this great gift is not dampened by unexpected hassles of a last-minute flight cancelation, flight delay, medical emergency or lost baggage get him a travel insurance. In case he is planning to travel to multiple cities or countries after retirement, opt for a multi-trip travel insurance. This will keep him set for all his short trips for the year without worrying about applying, paying and arranging for travel insurance for each travel plan. Additionally, if your father is a senior citizen, taking a senior citizen travel insurance with comprehensive cover will ensure he enjoys his trip with no worry. 

Going Digital: Another very helpful advice that you can give to your Father is to go digital for all his financial needs, be it shopping, making payments, transferring funds, booking tickets, investing or taking any credit product. Adapting to digital mediums can bring him a great deal of independence and can make him free of conventional, unrewarding practices in personal finance and can significantly reduce the time and effort spend on such tasks. However, just recommending won’t help, take out time and take him through the whole process. Spending some quality time along with teaching him how to use new age technology for his ease will be a rewarding experience for you as well.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Fathers Day

Gaurav Chopra

The author is Founder & CEO, IndiaLends

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