10th December 2015
While kids are going to be more interested in toys and gadgets, Adrian Lowcock, head of investing at AXA Wealth lays out five potential financial presents for children, which are likely to be more enduring and remain long after other gifts have been forgotten…
Mankind has been fascinated by gold for over 4,000 years – from the Bronze Age through to modern city finance and its allure remains strong. As an investment it is difficult to value, it does not produce anything nor does it generate an income but it continues to be in demand by investors in times of crisis. Gold coins provide a combination of a valuable investment whilst giving you something to appreciate and admire. There are a large number of coins from which to choose from ranging in value and age. The Royal Mint offers a wider range of gold coins commemorating various events.
Putting some money into an ISA might not be on the top of everyone’s letter to Santa, but in years to come that money may have grown in a significant sum. A parent or guardian can set up a Junior ISA but anyone can contribute up to the annual allowance of £4,080. A Junior ISA taken out in a child’s first year and growing at 5% per annum would have more than doubled in value and be worth nearly £10,000 (£9,819). In addition you can help encourage an interest in savings and investing at an early age. This habit is better developed sooner rather than later.
Anyone over 16 can buy Premium Bonds in their own name; however, relatives can also buy them on behalf of under-16s. The minimum purchase is £100 worth of bonds with a maximum holding of £40,000. Premium bond holders get put in a monthly prize draw. The average prize is based on an interest rate of 1.35 per cent tax-free. The odds of a single £1 bond winning in any one month are 26,000 to one. Each month each bond holder has a chance of receiving a tax-free prize of between £25 and £1 million.
Premium bonds are backed by the government so there is an implicit guarantee of investor’s capital. However any prizes are down to luck and investors may not win anything. Visit National Savings and Investments for more information.
Cash savings accounts
Dedicated children’s savings accounts often boast the most generous interest rates on the High Street. For example, Halifax Kids’ Regular Saver account is paying 6%. This allows savings per child of £10 to £100 a month. But the rate is guaranteed for only a year and interest is paid at the end. These accounts hold money in the child’s name and can be good way to encourage children to save.
Those with a longer term horizon should also consider investing in shares. There is a wide choice of shares available but those looking to do it themselves for the first time may prefer funds which offer diversification and do not require constant monitoring.