Premium bonds, cash, gold, Bitcoin or stocks – what’s the best last minute Christmas present? | Personal Finances | Finance

Each of these financial offers has its advantages, but some are riskier and more rewarding than others, so choose carefully. Here is what you need to know.

National Savings & Investments (NS&I) Premium Bonds are the country’s most popular investment, held by around $ 23 million.

Parents and grandparents love to gift them to children because they are backed by the government which makes them safe but offers the excitement of winning cash prizes.

The monthly draw includes two jackpots of £ 1million and the chance to win smaller amounts ranging from £ 25 to £ 100,000.

It sounds exciting, but the annual price rate is only one percent of your stake.

Anna Bowes, founder of Savings Champion, said there is a danger that beneficiaries may not be able to earn anything on premium bonds over the course of a year. “The more you buy, the better your chances.”

For a more reliable return, consider cash instead.

Cash is king this Christmas with many parents and grandparents setting up savings accounts for children.

Local construction companies often give you the best deals. Dudley currently pays a variable amount of 3.5% on deposits between £ 10 and £ 150 per month.

Otherwise, Halifax pays 2.5 percent between £ 10 and £ 100 per month.

For lump sum deposits, HSBC MySavings pays 2.5% on balances between £ 10 and £ 3,000, and 0.25% above.

Barclays Children’s Savings pays 1.51% on balances up to £ 10,000, then 0.01%.

Bowes said: “Don’t feel like you have to use your own bank or mortgage company, but search for the best deal online.”

The downside to cash is that interest rates stay low while inflation soars, so money could lose value in real terms over the next year or so.

READ MORE: The 13 Ways to Increase Your Income this Christmas

Gold may make a sparkling Christmas present, but the precious metal has lost some of its luster, falling nearly five percent this year.

The price of gold could also struggle next year, said Laith Khalaf, head of investment analysis at AJ Bell. “Interest rates are expected to rise, which will make cash and bonds more attractive than gold, which pays no dividends or interest.”

Although gold is known as a safe haven, its price can be volatile, Khalaf said. “It fell 40% between 2011 and 2015, so it’s not for the faint of heart. “

Bitcoin is sometimes referred to as digital gold, and many of its supporters now see it as a store of value.

However, cryptocurrency remains extremely volatile. It opened in 2021 at $ 29,388 and peaked at $ 67,582 in early November, then has fallen back to around $ 50,000 today.

The chance of making a lot of money on Bitcoin has probably passed and it is very risky, with the Bank of England warning that its value could drop to zero.

On the flip side, Twitter founder Jack Dorsey believes it could one day replace the US dollar.

So what will it be? Nobody knows, Khalaf said. “You might as well roll a dice on a spinning roulette wheel. “

Bitcoin works best for those who fancy a Christmas float.

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Equities and stocks had another strong year, with the FTSE 100 up around 12% and the US S&P 500 up 25%.

If investing for children, family and friends cannot invest up to £ 9,000 per year in a non-taxable Isa Junior Stocks and Shares, from online platforms such as AJ Bell Youinvest, Bestinvest, Fidelity, Hargreaves Lansdown, Interactive Investor, and Vanguard LifeStrategy.

Laura Suter, personal finance manager at AJ Bell, offers three Junior Isa funds. The low-cost Fidelity Index World passive fund that tracks the global stock market, Liontrust Sustainable Future Global Growth, which targets green businesses, and the very popular Scottish Mortgage Investment Trust.

Fawad Razaqzada, market analyst at Think Markets, is cautious about the outlook for stocks and crypto in 2022. “Both have been motivated by fiscal and monetary stimulus and could struggle if central bankers and governments are forced to reduce this support. “

A mix of these different asset classes could make the perfect Christmas present, if you can afford it.

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