Fair Investment Company has suggested that parents may wish to consider their child's future by investing the money in a deposit-based child trust fund, rather than giving children monetary gifts.
Research from Moneyexpert predicts that generous relatives will have given children in the UK GBP2.4 billion overall in the Christmas season, with almost half of adults handing children some form of monetary gift. It has found that while most give between GBP20 and GBP50, some will have presented youngsters with as much as GBP250.
All children born on or after September 30, 2002, and in receipt of child benefit are eligible for a child trust fund (CTF) and GBP1,200 can be paid into the account tax-free each year.
James Caldwell, director of Fair Investment, said: Deposit-based child trust funds could be a good way of investing money that might otherwise be frittered away. Your children are likely to thank you when they hit 18 and find they have a substantial nest-egg waiting for them.