August 2 2014 Latest news:

...but there are some financial gifts that can pay dividends for young children for many years to come.

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It’s that time of year when thoughts turn to buying presents for loved ones. But when it comes to very young children, you could try something different,

Handing over money at Christmas is not always considered to be the most original present. Indeed, simply sticking a cheque in an envelope can be considered the lazy option. But there are some financial gifts that can pay dividends for young children for many years to come.

Premium bonds

As an alternative to sending a cheque that will simply be banked and used for something that could be quickly discarded, you could consider buying premium bonds.

These bonds can be bought for children under the age of 16 by parents, grandparents, great-grandparents and guardians, and they make presents that can last a lifetime.

But the beauty of premium bonds as a gift is that they have the potential to win a prize in every monthly draw. And nothing stops the recipient cashing them in at a later date and using the money for something else, so the situation can eventually be rectified even if it’s dismissed as a dull present.

There’s also the possibility – albeit a remote one – that your present could make your child or grandchild a millionaire. Now who said premium bonds made for a boring gift?

A pension

This might seem to be just about the dullest gift idea going, but it could also be one of the most beneficial things you do for a loved one.

When a child is celebrating an early birthday, there is only a limited range of things that will be appreciated straight away.

So you could consider starting a nest egg for your child or grandchild that will be appreciated many years from now – in many cases, long after you have gone to a better place.

You might find the figures staggering. If you were to make a contribution of £100 every month until the child turned 18 – even if all contributions were stopped from that point onwards, and making some basic growth assumptions – the savings pot could grow to £325,000 (or about £100,000 at today’s prices) by the time the beneficiary turns 65.

Of course, if the child continues to contribute to that pension pot over the following years, the final figure will be much, much higher.

You’ll be killing several birds with one stone – giving a present that will literally keep on giving; doing your

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