Christmas is a time for giving.
The tradition can be traced back to the Three Wise Men, via Charles Dickensโ A Christmas Carol and by way of retailers of the late 19th century. But whatever its origins, it has become the main event of the festivities, especially for children.
But as soon as they get past the teddy bear, train set and dolls pram stage, knowing what to give children becomes difficult. It becomes impossible once they reach teenage years.
Which is why many of us opt for giving money.
There are several ways to do just that - and at Continuum we are looking at why some may be more appropriate than others.
Cash
We are fast becoming a cashless society, and todayโs children may be puzzled by the traditional solution of slipping a few notes inside a card.
On the plus side it is easy to do, although you will probably have to find a cash machine. On the minus side, although it might be appreciated at the time, it does not have any lasting benefit. Cash is easily lost as well as easily spent, and your generosity is likely to soon be forgotten.
So, what can you do instead?
Savings
One answer can be to set up a savings plan for a child. It may be much more appropriate better for them, because it can be the basis of a savings habit that will help give them a better start in life. It could also be better for you, because it will provide the easy answer for present giving not just once, but for Christmas and birthdays for years to come.
You can even club together with other family members who are at a loss about what to give.
There are many junior savings accounts to choose, often with worthwhile extras for children of various ages, but it is important to find the account that offers a good rate of interest as well as the gimmicks. Children will want to be able to watch the growth of their savings on screen โ so an account that offers online access is aworth considering.
Junior ISA
A savings plan with small gifts put in at Birthdays and Christmas for 18 years or so can add up to a worthwhile sum.
The same gifts could potentially add up to more in a Junior ISA.
The Junior ISA (JISA) allowance for the 2024-25 tax year is ยฃ9,000. The tax year runs from 6 April 2024 to 5 April 2025. The allowance cannot be carried over if you do not contribute the full amount in one tax year.
Like adult ISAs, any growth in a Junior ISA is free from UK tax. Once opened by a parent or guardian, anyone can contribute to a Junior ISA.
There are plenty to choose from. As with adult ISAs, there are cash JISAs and Stocks and Shares JISAs. So rather than savings, with limited returns, the child could have investments, with the potential for substantially higher growth and returns.
It can be secure. Money put into a cash JISA is protected up to the value of ยฃ85,000 by the Financial Services Compensation Scheme. Money put into an investment JISA will be protected up to ยฃ85,000 if the investment provider fails, although returns cannot be guaranteed.
Getting some help
When itโs a matter of cash, giving is easy enough. But finding the most appropriate savings account, and JISA demands professional help. There are many providers who can offer suitable schemes, but getting the most value for your money needs the help of someone who knows the market.
At Continuum, we can help you find suitable ways to arrange a savings plan or a JISA โ or even consider other alternatives like a childโs pension.
To find out more about efficient ways to give money to children this Christmas, simply call us now.
What is the Financial Services Compensation Scheme (FSCS)? - Money To The Masses
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, or a recommendation to a particular saving or investment strategy you should seek independent financial advice before embarking on any course of action.
The value of an investment can go down as well as up and you may get back less than you invested. When investing Capital is at risk
Investors in ISAโs do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.
Levels and basis of reliefs from taxation are subject to change and depend upon your personal circumstances
Stocks and Shares ISAs do not include the same security of capital which is afforded with a deposit account
The Financial Conduct Authority does not regulate taxation advice and deposit accounts.
A pension is a long-term investment; the fund value can go down as well as up and this can impact the level of pension benefits available. Pension Income could also be affected by interest rates at the time benefits areย taken. Pension savings are at risk of being eroded by inflation.
The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.
