personal finance

Forget gold, Bitcoin, Premium Bonds or pensions – CASH is still king at Christmas

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Almost two thirds will continue the old tradition of slipping a fiver into a grandchild’s Christmas card, double the rate for younger generations. Premium Bonds used to be a festive favourite but just two percent of parents and grandparents will gift them this year, put off by the low annual prize rate of just one percent.

Cryptocurrency Bitcoin is similarly out of favour, according to research from AJ Bell.

Head of personal finance Laura Suter said cash still cuts it. “Stuffing some cash in an envelope is one tradition that refuses to die out, even in today’s digital society.”

One in five plan to transfer money directly into the recipient’s bank account, which is practical but impersonal, Suter added. “The benefits are that it can’t get lost like physical cash or forgotten like a gift card.”

Precious metal gold is another popular festive gift, with the Royal Mint reporting a 510 per cent surge in sales during November and December last year.

Gold and silver specialist Physical Gold is seeing an increase in older generations purchasing physical gold for children and grandchildren.

Chief executive Daniel Fisher said do not leave it to the last minute. “The gold price often climbs before Christmas due to gift buying.”

Jason Hollands, managing director of online investment service Bestinvest, urged parents and grandparents to invest for children inside their Junior Isa allowance, where all returns are free of tax.

“Family and friends can invest up to £9,000 this tax year. The funds cannot be accessed until the child is 18, at which point the Junior Isa converts to an adult Isa.”

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Hollands said: “If you put £50 a month into a Junior cash Isa at two percent it would grow to £13,080 after 18 years. However, it would be worth £17,655 if invested in a tax-free Junior stocks and shares Isa, assuming average growth of five percent a year.”

Hollands also suggested investing in a pension on behalf of children. “You can invest up to £3,600 and claim 20 percent tax relief, so effectively it only cost you £2,880, with the state paying the remaining £720.”

£1,000 invested in a pension at birth would be worth £23,840 by the time the child turns 65, assuming growth of five percent a year.

Hollands added: “Children may not thank you for investing in a pension for them this Christmas, but they will be grateful one day.”

They’d still choose cash if they could.



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