Give a financial gift that will have a lasting impact

WITH family budgets under pressure, the thought of squandering a fortune on presents that break on Boxing Day may well set your teeth on edge. So why not consider giving a financial gift this Christmas?

There is a range of options for young and old which not only glister, but will last potentially a lifetime.

Kiddie accounts

Much better than putting a tenner in a card, if you open a savings account for a youngster you can give the gift of thrift, with the added bonus of a free toy. Many of these accounts come not only with a good rate of interest but a package of freebies, so the child gets toys and money as well. It is always important, though, to check the interest rate to make sure he or she is earning well.

With an Abbey Flexible Saver, paying 4.4%, a child can choose between a soft toy and mini radio. Halifax Save4it is paying 5.05% and comes with a coin bank and kitbag.

The Dunfermline Building Society gives a piggy bank and biannual magazine to the under-10s, but pays lower interest at 3.9%. The Royal Bank of Scotland pays 3.85% and gives the under-10s an Ollie personal organiser and welcome pack.

Some of the best returns are to be had by regular savers, so your niece or grandson will be quids in if you pledge to put a little away each month. If a child saves between £10 and £100 monthly with Halifax, he or she can earn 10%.

To choose a suitable account, check out the best buys on www.moneyfacts.co.uk. But when it comes to kiddies, a branch near home is probably more important than picking the top rate.

Giving cash to children can help cut the family tax bill, as children have a personal allowance, currently £6,035, so they can earn up to this limit on savings given to them by anyone except their parents without paying tax. It is important that the child completes an R85 form which allows them to receive interest before tax is deducted.

Offspring can, though, earn £100 interest tax-free from money given to them by each of their parents.

For a longer-term gift, you could make a donation to a niece's or nephew's child trust fund, a tax-free savings account which all children born after 2002 should have. An injection of up to £1,200 annually can be made into the trust by friends and relatives, but the money is locked away until 18.

Premium bonds

These are a perennial favourite, as they are a way of giving cash and hold out the chance of a big tax-free win. December's draw has 1.8 million prizes, and there are two £1m prizes every month.

Only parents and grandparents can buy bonds on behalf of under-16s. The minimum investment is £100.

Charities

If you hate all the waste at Christmas, agree with your family that instead of giving each other gifts you will spend the money on those who really need it.

Oxfam operates a Christmas gift system, Oxfam Unwrapped (www.oxfam.org.uk/shop/Hub.aspx?catalog), whereby you choose a gift, which can be anything from a goat to mosquito nets. You are then sent a gift card and magnet to give to your loved one with full details. For example, £8 will buy school books, £25 a goat, £29 a sheep and £18 an animal house.

Cafod has a similar scheme at worldgifts.cafod.org.uk with items such as a starter pack for school at £7, a bicycle at £50 and a vegetable garden at £10.

Another worth considering is www.sendacow.org.uk, which sends livestock to impoverished families in Africa. A cow costs £750, so would often have to be spread across the family.

You can give someone the gift of sight by paying £17 for a cataract operation at www.giftofsight.co.uk, part of Sightsavers International, which Scotland on Sunday is supporting with its Christmas Appeal.

Another site to consider is www.goodgifts.org.

Gold

Demand for gold continues to be strong. The price last week closed at $749.

You can buy jewellery but a sounder investment might be gold bars or coins, which can be bought over the counter at a gold or bullion dealer, by post or over the internet. These have an immediate resale value but also the prospect of a good hedge against inflation, currency swings and uncertain markets.

A one gram bar currently costs £24 but has an immediate underlying resale value of only £16.20, giving a mark-up of 48% to the retailer. The bigger the bar, the lower the mark-up. A kilo bar costing £17,035 has an underlying value of £16,140, reducing the mark-up to 5%.

Alternatively, buy a gold coin for a present. Sovereigns dating from the late Queen Victoria period from 1887 and up to 1982 are currently the best bet. These cost £136 to buy but have an immediate resale value of £118. By contrast, modern coins dating from 2000 cost more, at around £160, yet their intrinsic value as an investment is the same at £118.

Pre-late Victorian coins are even more desirable, but these have much greater rarity value and therefore are more expensive.

Another popular option is to buy South African Krugerrands. The smallest is a 10oz coin, which might cost £70 with a resale value of £50. A 1oz coin currently costs £567 and has a resale value of £512.


Investments that let you share in perks

MANY companies offer special concessions to shareholders, which in some cases only require the purchase of a single share. With share prices so low, some of these are looking attractive.

Laura Ashley gives a 20% discount to shareholders with just one share, currently trading around 12p. You would have to pay dealing costs on top, although cheap online dealing begins at around £6.

Pricier is Next, offering 25% off if you hold 500 shares, which closed yesterday at around £9.90.

Marks & Spencer also sends out vouchers giving up to 10% discount with January dividends, although only for shares registered the previous November, so shares bought today will not carry free vouchers until January 2010. Again you only require one share, currently costing about £2.14, to qualify.

Also with one share, Legal & General, currently trading around 74p, offers discounts, cutting 25% off home cover, 12.5% off travel cover and 10% off life cover.

On occasions perks can be worthwhile even if the investment is a washout. Eurotunnel, launched over 20 years ago, has yet to pay a dividend. But at issue the shares came with a limitless right to travel for £1.

Today you would need to invest in 30,000 Eurotunnel shares, currently trading around ?4, to receive a 30% discount on three return or six single trips a year.

For a full list of companies offering shareholder perks try www.h-l.co.uk/shares/shareholder_perks

An attractive collectable item is a framed historic certificate for a bond or share. Particular popular are early railway or banking share or bond certificates, or anything linked to the gold rush or dotcom booms. Bonhams holds regular sales of what is known as scripophily, or try the International Bond and Share Certificate Society (www.scripophily.org)

Finally, football fans may appreciate a single share in the love of their life, sold as part of a gift pack.

However, this will have little if any investment value. Bell Lawrie's Bryan Johnston said: "Football shares are nice to own if you follow the club, but they should never be bought as a serious investment. Just look at the salaries they pay to their staff."