Why financial gifts like shares and gold bullion make sense as Christmas gifts

TOYS are fun and will keep the kids happy for a couple of hours but here are some ideas for Christmas presents that will truly enrich their lives.

Iris aged 5yrs old with chocolate gold, pictured in NewsCorp studio, Surry Hills.

BUYING a younger family member a financial Christmas gift could avoid the problem of giving them a stack of unwanted presents that end up in the back of a cupboard.

Instead of wasting money on expensive toys or clothes they quickly grow out of, a financial present is a good way to spend money on children.

AMP financial planner Mark Borg says buying kids shares at this time of year is particularly popular among grandparents looking to give their loved ones a financial kickstart.

“Giving them an understanding of the market is a good educational tool and is much better than getting them a PS4 (gaming console) that will result in them wanting a PS6 the next year.”

Managed funds — a diversified way to invest money in a range of asset classes, i.e. shares, property and bonds — is also another way you can invest money for children.

“It becomes like a savings plan, they can kick off managed funds with an investment of $1000 and add $100 at any stage,’’ Borg says.

Children can earn up to $416 a year without paying any tax if the asset is invested in the child’s name.

Games are great for a while but gold of shares will last a lifetime.

But if you invest in an asset that’s held in your own name with the plan of giving it to the child down the track there will be implications including capital gains tax when you change ownership.

Investing in gold is another possibility for parents or grandparents, ABC Bullion’s chief economist Jordan Eliseo says.

“You can invest in quite small amounts, you can buy a five or 10 gram gold bar for less than $300,’’ he says. “Silver is even cheaper; you can buy coins and tablets for under $30.

“We have many clients who accumulate gold over time in the view that they will pass it on to their children or their grandchildren.”

Gold prices have climbed on average by 10 per cent per annum.

You can open an account with a reputable bullion dealer online and order the bullion online or over the phone — they can also arrange storage.