A present to treasure for years, not just a few hours

Toys are transitory but a savings account just keeps on giving. Simon Read reports

Dunfermline building society – owned by Nationwide – is targeting children with its latest market-leading savings account. Its four-year Child Savings Bond launched today pays 5 per cent gross and is timed to coincide with the approaching Christmas giving season.

Niall Fraser, the head of branches at the Dunfermline, says: "The festive season is a good time to promote a savings message to young people. Apart from birthdays this is the time of year when youngsters are likely to receive money gifts from absent family members.

"We believe that trying to build a savings culture, rather than a borrowing culture, can only be a good thing but it is important to start as early as possible to get the message across. It is also worth noting that many children's gifts, such as toys, have a short shelf life, but a good financial education is a skill that will stay with the child his or her entire life."

Wise words and ones that will ring true with thousands of parents who will see expensive presents cast aside by Boxing Day this year. Research from the Children's Mutual shows that the average child will be given £380-worth of presents this year, while being handed just £73 in cash.

David White, the chief executive of The Children's Mutual, says the cash could grow into an important nest-egg, while presents will soon be discarded. "Around £200 is spent on presents that won't make it past Easter, but if this money was invested in a Child Trust Fund (CTF) each year, it could be worth £6,100 by the time it matures when the child turns 18."

Every child born since 1 September 2002 has been given a CTF, with the Government starting it off with £250, with a further £250 at age seven. But a further £1,200 per year can be invested in the funds by family and friends, and Christmas is an ideal time to give children a cash boost.

The funds can be invested in simple savings accounts or investments. "For those who want their money to be as safe as possible, cash CTFs are the place to be," advises Justine Fearns, an investments research manager at AWD Chase De Vere.

For investment CTFs, Ms Fearns favours the Children's Mutual. "It offers access to some great funds from Invesco Perpetual, Gartmore, Insight and UBS, including the Invesco Perpetual Income Fund and Gartmore Cautious Managed, as well as offering a Shariah compliant CTF."

If your children are too old for CTFs, it may be worth looking at other long-term investment opportunities to help give them a financial start. "Investment trust savings schemes are another way you can save for your children and can offer excellent value," says Sherry-Ann Sweeting of Scottish Investment Trust.

Ms Fearns advises that parents approach children's savings in the same way as their own. "It is important to remember that, unless there is a specific need for investment, investing for children is really just like investing for yourself – you need to consider the usual things, such as term of investment, access required, the risk that you are willing to take and how much you are going to be investing."

She suggests the M&G managed fund as a core investment. "Or M&G's Cautious Multi Asset fund, which invests across a range of asset classes to help reduce volatility over time."

If you are wary about risking your children's cash on equity markets, then you should stick to savings accounts. "But parents and grandparents must shop around for the best deals on children's accounts," warns Kevin Mountford of Moneysupermarket.com.

"With the average rate at only 1.07 per cent it's important to keep an eye on the rates to get the best return."

Dunfermline's new four-year bond is worth considering, but also check out our table of current best buys.

Early start: A nest egg for the boys

Five-year-old Ewan and one-year-old Fraser are set to get a cash boost this Christmas. Fiona and Colin Watkins have encouraged family and friends to top up the boys' child trust funds.

"My parents have given them £100 each, and that's on top of the £10 they put in every month to each account," says Fiona, 36. "We also put in a tenner each month and we hope that the accounts will give them a good nest egg by the time they reach 18."

The couple chose stocks and shares child trust funds with the Children's Mutual. "I know stock markets have been highly volatile recently," said Fiona, "but we are hoping that it will balance out over time."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before