3 Financial Christmas Gifts

Your children and grandchildren might want the latest games console this Christmas, but a financial gift will keep on giving for years to come

Jonas Lindmark 23 December, 2020 | 8:55AM
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Financial gifts

Christmas has become a family holiday centred around extra consumption, spending money to create happiness. But the best gifts do not need to be expensive; the key is that they are both obviously useful and higher-quality than people would choose for themselves. Perhaps treating the tea-lover of the house to some fancy tea leaves, or the resident fashionista to a luxury item.

In some ways, financial gifts are a contradiction to the usual Christmas spirit. After all, Christmas is about joy and giving, not financial returns. But a financial gifts could be the one that keeps on giving for years to come if you get it right. Here are three ideas:

Cash

Cash is a very popular gift, especially among younger people, since it can be spent on anything. Scientific studies claim that on average Christmas gifts are in general valued lower by the recipient than the cost for the buyers. From this perspective cash is more likely to be appreciated than anything gift-wrapped.

On the other hand, giving money might be perceived as showing lack of imagination. And most people would miss the fun and surprise of larger packages, if all Christmas gifts were envelopes with cash. If you don’t like the idea of handing over cash in an envelope you could treat your loved one to some Premium Bonds, which provide the monthly anticipation of a potential jackpot win.

Shares

Individual stock holdings are a high-risk way to invest but they could spark an interest in investing if you choose well. Think Nestle shares for that chocolate-loving relative, or LVMH shares for your household’s champagne-sipper. Some shares come with benefits too, which can be an added bonus for the owner. You only need to hold one share in publishing company Bloomsbury to get a 35% discount on its products – a great gift for any bookworm.

A main advantage of a gift in the form of shares, of course, is that it offers the chance that even a small investment can grow to a fortune, if you pick the right stock and are prepared to wait.

Funds

Global equity funds may not offer the instant recognition of owning a share in a much-loved brand, but they do at least come with the benefits of diversification. So, if you’re looking to give the gift of global growth, a fund with a strong track record could really deliver.

A low-cost index fund or ETF is an easy place to start and could be a valuable stepping stone for a young relative building a savings pot to buy their first home or pay their school tuition fees in the future. Options might include the Gold-rated Vanguard FTSE Developed World Ucits ETF, for example, or the iShares Core MSCI World ETF

And, finally, if your budget is tight after a difficult year, give a gift that costs nothing: sign a friend or family member up to the Morningstar newsletter for a daily dose of finance straight into their email inbox. Ok, you might have to buy them a box of chocolates too…

 

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Jonas Lindmark

Jonas Lindmark  has been editor and head of fund analysis at Morningstar Sweden since August 2000. Before that he was personal finance editor and designed fund ratings during 9 years at the weekly business magazine Affärsvärlden.