【09.12.22 每日电讯报】Financial gifts for Christmas

渔音谦谦

Financial gifts for ChristmasForget about the latest fad, the best present any child can receive at this time of year is one that lasts and increases in value over time. We look at the options.



A robotic hamster called Mr Squiggles is, apparently, the hot Christmas present for children this year. But in 12 months they will, no doubt, be lying forgotten at the bottom of the toy cupboard. If you want to give something of longer-lasting value, why not consider Premium Bonds, gold coins – or even pump-priming a pension? The latter option has only been available in recent years but can prove a tax-efficient way of passing wealth between generations – and ensure the donor is gratefully remembered long after he or she is gone.
Here is a quick guide to Christmas presents that could prove a valuable nest egg for your children. Gold and silver
If you buy your child a gold coin they can at least enjoy handling it while you think of the possible gain in value. The precious metal – an investors' favourite in turbulent economic times – has appreciated dramatically in recent years; it traded at about $270 an ounce in 2001, but currently fetches about $1,130 (£690). British buyers should always bear in mind, however, that the sterling price is affected by the exchange rate as well as the gold price, which is quoted in American dollars.
One popular gold coin is a Queen Elizabeth II sovereign, which Baird & Co, a bullion dealer, sells for about £185, although it cannot now supply them before Christmas. Sovereigns and Britannias – another British gold coin – are also exempt from capital gains tax," said Alex Baird from the company.
A cheaper option is a one-tenth of an ounce gold coin, starting at about £80, he added.
Silver is another possibility. "Silver rounds" – which look like coins but are not legal tender – are selling well at the moment, according to Mr Baird. "One-ounce silver rounds at £14.50 with a box are outselling anything else by a factor of 10 to one," he said. "They are significantly cheaper than silver coins." Child Trust Funds
Child Trust Funds (CTFs) are tax-free savings and investment accounts for children. Children born on or after September 1 2002 receive a £250 voucher from the Government to start their account, then another £250 at the age of seven. The account belongs to the child and can't be touched until they turn 18, although they can start to decide how the money is managed when they turn 16. Parents, family or friends can top up the fund by a maximum of £1,200 (in total) each year.
If the child has a stakeholder account, it can be topped up by cheque, standing order, direct debit or direct credit. For non-stakeholder accounts it's up to the individual provider how they choose to accept payments. Parents who want to play safe with their child's nest egg can opt to put the money in cash – the best-paying cash CTF, according to Moneyfacts, the data provider, is Hanley Economic Building Society's, which pays 5pc. Children's savings accounts
A more flexible way of putting money aside for children is a conventional savings account; some are intended specifically for youngsters and often pay better rates than accounts available to all. For example, Halifax's Children's Regular Saver account pays 6pc (fixed for a year). You must deposit between £10 and £100 per month. But there is no contribution from the Government. You can apply online, by phone or in a branch. Premium Bonds
Parents and grandparents can buy Premium Bonds on behalf of under-16s, according to National Savings & Investments, the state-owned body that sells them. On average, the return is 1.5pc tax-free, although actual winnings are of course down to the luck of the draw – the odds of a single bond winning in any one month are 24,000 to one. The minimum purchase is £100 worth of bonds; the maximum holding is £30,000.
Although you can buy bonds for yourself online, you cannot do so if you are buying on behalf of a child; you have to visit a post office or apply by post. Investment funds
Many financial advisers say investing in shares is the best way to increase your money over the long term. Buying funds such as unit or investment trusts spreads your risk over a number of individual shares, while the manager can switch companies as he sees fit without you lifting a finger.
But there is a vast array of funds on the market – which should you choose? "If you are investing for children, you want a manager who has a good track record and is there for the long term," said Ben Yearsley of Hargreaves Lansdown, the financial adviser. "Neil Woodford, who runs Invesco Perpetual's equity income funds, fits the bill admirably – and the current fund price means now could be a good time to buy."
If you are looking for something that offers potentially higher returns – and therefore higher risk – Hargreaves Lansdown believes emerging markets could well be the dominant investment theme of the next decade and beyond, although this is a volatile sector and there will be setbacks.
"Nevertheless, given the long investment time frame when investing for a child, you are well positioned to ride out volatility. We think that anyone investing on behalf of children should consider the Aberdeen Emerging Markets fund, which is one of the best in the sector." Pensions
You can put a maximum of £2,880 into a Sipp (self-invested personal pension) for a child each year, said Tom McPhail, also of Hargreaves Lansdown. The Government will add £720 in tax relief, boosting the value to £3,600. The investments then grow free of UK income and capital tax.
The £2,880 also falls under the £3,000 annual gift limit for inheritance tax (IHT), thereby exempting it even if you die within seven years, he added. This is one way of transferring money IHT-free to children while you are still alive – also known as "giving with warm hands".
Mr McPhail said: "Saving £3,600 a year or £300 a month from a child's birth to age 18 would mean that they have a pension pot worth £1.82m at age 65 on standard assumptions for investment returns, even if they never make a contribution themselves." After allowing for erosion by inflation, this sum would be equivalent to £366,413 in today's money.
"The youngest client we have set up a Sipp for was three days old. Clearly her parents were very keen to ensure her money was invested for as long as possible." About 60,000 children have either a personal or stakeholder pension (or both), according to HM Revenue & Customs.
Malcolm Cuthbert of Killik & Co, the stockbroker, has set up pensions for 11 nieces and nephews. He put £80 into a stakeholder pension for each child a few years ago, when their ages ranged from one to 18. This sum was boosted to £100 by tax relief.
He put the money into a technology fund, a fairly high-risk option, but he said it should do well over the long term. "It has risen by about 40pc so far and I estimate that my £100 could turn into about £8,000 over 65 years," he said. This would be equivalent to about £2,400 in real terms.
"It is all about educating them about finances and encouraging them to develop personal responsibility. Some of the older ones are beginning to take an interest in the investments," he said. "More people should do it. But don't expect any thanks when you do – children just want toys."

原文库：http://www.telegraph.co.uk/finance/personalfinance/consumertips/6865321/Financial-gifts-for-Christmas.html

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