A Promise That Grows: Why Starting a SIP Can Be a Meaningful Rakhi Gesture

A simple guide to encouraging your sibling to take a step towards investing this Raksha Bandhan

Every Raksha Bandhan, sisters tie a rakhi around their brothers’ wrists a tiny thread carrying a rather big promise: I’ll always have your back.

Then comes the other, equally time-honoured tradition: the brother reaches for his wallet.

Over the years, the gifts have evolved. Sweets became chocolates, chocolates became gadgets, and cash envelopes became UPI transfers. But perhaps there’s another way to make the Rakhi gesture count not just today, but years from now.

This Raksha Bandhan, instead of just thinking only about what to give, why not think about what you can encourage your sibling to do for their future?

A SIP (Systematic Investment Plan) can be one such step. It is a simple, disciplined way of investing a fixed amount at regular intervals, helping build an investing habit over time. And unlike that smartwatch, it doesn’t need charging.

Can Rakha Bandhan Be a Nudge to Start Investing?

Mutual funds may not have a convenient “Gift this Investment” button just yet perhaps one for the wish list? but you can certainly encourage your sibling to begin their investment journey.

For an adult sibling, you can guide them towards starting a SIP in their own name, based on their financial goals, investment horizon and risk appetite. For a minor sibling, investments are subject to applicable rules and requirements, and the process may differ from that for an adult investor.

Since mutual fund investments are regulated by SEBI, the applicable KYC and other prescribed requirements need to be completed before an investment can be made. If your sibling is unsure about which fund or investment approach may be suitable, they can consider consulting a qualified mutual fund advisor.

So, the Rakhi gesture doesn't have to be about handing over an investment. Sometimes, it can simply be about giving someone the right nudge to start one.

Why a SIP Is a Meaningful Rakhi Gesture

A lump-sum gift says, “Here’s something for you” encouraging someone to start a SIP says, “I’m thinking about your future, too.”

That’s what makes the idea a natural fit for Raksha Bandhan.

A SIP is a recurring investment where a fixed amount is invested at regular intervals. Much like a Rakhi is a yearly reminder of a bond that lasts far beyond one day, a SIP is a small commitment that continues month after month.

And then there’s compounding.

A relatively small monthly investment, given enough time, has the potential to grow into a meaningful corpus as returns generated over time can themselves generate further potential returns. This is why starting early can matter the advantage isn't necessarily about making a big investment on day one; it’s about giving the investment more time to grow.

Of course, mutual fund investments are subject to market risks, and returns are neither guaranteed nor fixed. The value of the investment can move with market conditions and the scheme chosen.

SIPs can also be started with relatively small amounts, although minimum investment amounts vary across schemes and fund houses. So, whether the starting amount is a few hundred or a few thousand rupees a month, the bigger idea is the habit of investing consistently.

Step-by-Step: How to Start a SIP for Your Sibling

1. Complete KYC verification: Your sibling will need a PAN card, an Aadhaar-linked bank account, and to complete their KYC either online (via video KYC) or through a physical form, if they haven't already (check the AMC website)

2. Choose a fund category: Decide on an equity, debt, or hybrid fund based on your sibling's age, risk appetite, and investment horizon.

3. Decide the SIP amount and date: Pick a monthly amount that's comfortable to sustain and a debit date that aligns with their cash flow.

4. Set up auto-debit (mandate): Register an NACH or e-mandate so the SIP amount is deducted automatically from the bank account each month.

5. Confirm the first installment: Most platforms process the first SIP installment shortly after mandate registration, with subsequent installments following the chosen cycle.

Encourage your sibling to review the investment's progress every few months rather than daily, since SIPs are built for the long term.  You can also consult a financial advisor before investing.

What Kind of Fund Should You Choose?

This is where the Rakhi gesture needs a little more thought than simply picking a scheme because someone mentioned it in the family WhatsApp group.

There is no one-size-fits-all fund or one “best” fund for every sibling.

The right choice depends on factors such as the investment objective, time horizon, risk appetite, existing investments and financial commitments.

For eg. A sibling investing for a goal five years away may have very different needs from one investing for a goal 15 years away. Similarly, someone comfortable with market fluctuations may have a different risk profile from someone who prefers greater stability. You may consult a financial advisor before investing.

The point is simple: choose based on the person and the goal, not just the occasion.

This article is meant to be educational rather than prescriptive, the specific fund category and scheme should ideally be chosen after your sibling reviews the scheme information document and, where appropriate, consults a qualified financial advisor or mutual fund distributor.

Other Meaningful Financial Gestures Beyond SIPs

A SIP isn’t the only way to make your Rakhi gesture financially meaningful.

• Lump Sum: Investing a larger amount at one go, rather than spreading it across regular instalments.
• STP (Systematic Transfer Plan): Gradually transferring a predetermined amount from one mutual fund scheme to another at regular intervals.
• SWP (Systematic Withdrawal Plan): Withdrawing a predetermined amount from a mutual fund investment at regular intervals, which can be useful when the focus shifts from building wealth to generating cash flows.
• SIF (Specialised Investment Fund) offered by some fund houses: A newer mutual fund category designed for investors seeking differentiated strategies, subject to the applicable eligibility and investment requirement.

Each of these carries a different risk-return profile, so the right choice depends on what you're trying to achieve capital growth, stability, or simply building a saving habit. They can also consult a financial advisor before investing.

Sometimes, it’s about helping someone take the first step.  

Frequently Asked Questions

Can I gift a mutual fund folio to someone else in India?
You cannot transfer an existing mutual fund folio to another person as a "gift" in the way you might gift a physical item. Instead, you can help or guide your sibling or recommend him to a financial advisor, before investing in a new folio in their name (once their KYC is complete) or by transferring money for them to invest themselves.

Is there a minimum amount to recommend a SIP?
Minimum SIP amounts are set by individual fund houses and schemes, and are generally quite low, making it easy to start a SIP even with a modest monthly commitment.

Are mutual fund gifts taxable in India?
Money gifted between close relatives, including siblings, is generally exempt from gift tax under Indian tax law. However, any capital gains earned when the mutual fund units are eventually redeemed are taxable in the hands of the unit holder (your sibling), as per applicable capital gains tax rules. It's advisable to consult a tax professional for specifics relevant to your situation.

Can NRIs invest in mutual funds to siblings in India?
NRIs can invest in Indian mutual funds subject to FEMA regulations and fund-house-specific NRI KYC requirements. Rules can vary by country of residence, so NRIs should check fund house-specific NRI investment guidelines before proceeding.

What documents are needed to start a SIP in someone else's name?
The investor (your sibling, in this case) will typically need a PAN card, address proof, a bank account for the mandate, and to complete KYC formalities, since the folio and SIP must be registered in their own name, please check the amc website to know in detail.

A Promise That helps to Grow with Time

A Rakhi may be a thread, but the promise behind it lasts much longer.

This Raksha Bandhan, that promise doesn’t have to stop at “I’ll always have your back.” It can also be a little nudge towards thinking about the future and building a habit of investing.

No fancy wrapping paper. No batteries. No last-minute shopping spree. Just a small step that could keep growing with time.

So, this Raksha Bandhan, encourage your sibling to take that step—or perhaps take it yourself.

Some gifts are enjoyed today. Some gestures can grow into something meaningful tomorrow.

Mutual Fund investments are subject to market risks read all scheme related documents carefully.

Samco Mutual Fund | MF/077/21/03