Mutual Funds as Gift

As any self professed finance writer would profess his love for all things Buffet, same goes for me. In one of the earlier books that I read about the master was that when his tribe multiplied and they had occasions to celebrate he would give them unique gifts. The gifts were unique because the master was most likely to give stock certificates to his near and dear ones as gifts. Now since he is the best we have got out there I am sure each one of the gifts he showered on his flock would have multiplied many times.

I remembered this and was waiting for the occasion when I can give stocks or mutual funds as gift to my near and dear ones. The good thing about great masters is that you can follow the path shown by them even if you do not understand it completely.

So about a 1.5 years ago when my younger sister got married I decided to follow the footsteps of the great master and gifted her units in 3 different equity mutual funds in growth option. This was in middle of 2009 and while some of the gifts that she received have already become obsolete or further passed to some body else the units in the mutual funds have already grown by more than 40% on average. While she was not very happy at the time to receive the gift in form of mutual fund units as she felt that they were too impersonal and cold. Today when she looks at the bigger number in the unit statement she is sure proud of her brother.

Yesterday I received a call from a colleague and he wanted to know what gift he should give to the daughter of his brother who will be one year old around Christmas and my answer was units in a good equity mutual fund. My colleague was a little surprised at my answer but when I showed him my calculations and logic he agreed to my suggestion and is working on the formalities for the same.

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