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Esther Shaw

Top four financial gifts to give your child


While your child may ask for a games console or action figure, a financial gift could prove more valuable in the long run. Here are four worth considering.

Top financial gifts

A bundle of premium bonds

If you're looking for a "fun" financial gift, and fancy a flutter, you could give your son or daughter a bundle of premium bonds.

Each month, instead of earning interest, the holder is in with the chance of winning a tax-free cheque for £25 or one of a host of prizes up to the £1 million jackpot.

Equally, parents looking to invest for the longer-term could put money into an investment fund, such as a unit trust or open-ended investment company (OEIC).

"As most investments will be for a period of 10-18 years, it is likely the returns will be much better than cash savings," says Patrick Connolly from adviser Chase de Vere.

A Junior ISA

A Junior individual savings account (Junior ISA) is open to anyone under 18 and is a great way to build a nest egg for your loved ones.

Parents, grandparents and family friends can put up to £4,080 a year into one of these accounts, and the money can be split between cash and equities (stocks and shares).

The account will not mature until the child reaches 18.

Top financial tips

A Junior ISA is not open to people who have a Child Trust Fund, which also allow account holders to add up to £4,080 a year, although this scheme is now closed to new applicants.

The money belongs to the child but can’t be taken out until they’re 18.

A children's savings account

Another simple gift you could give your little one is a dedicated children's savings account.

At present, Halifax is paying 6% on its Kids Regular Saver 12-month fixed-rate bond on deposits of between £10 and £100 a month.

Halifax and Lloyds both have variable accounts paying 3%.

But remember to sign form R85 which allows your child to receive interest without having tax deducted.

Think about life insurance

It may be nowhere near as exciting as an Xbox or iPad, but buying a life insurance policy for yourself could prove to be a great gift for your child.

Life cover pays a guaranteed lump sum to dependants on death, giving both you and your loved ones peace of mind that liabilities are going to be met.

Top financial gifts

The good news is, the cover is generally inexpensive, with policies costing as little as £5 a month*.

Matthew Lloyd, head of life insurance at, says: "While it may not be a topic families want to discuss, for those who have children, life insurance provides a vital lifeline."

*Price based on a non-smoking 26 year old insured over 25 years for £100,000 of cover on a decreasing term policy, postcode CF10 1PZ. Prices correct at time of publishing.

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