Your Christmas gift is a tax saver

It might sound odd when so many are fighting to preserve their pensions, but parents who set up a child self-invested pension plan for their offspring could give them a healthy start. The kids won’t have access to the money until they are at least 55 but they will thank you for it when that day comes.

You can open a pension for each of your children, receiving tax relief on contributions of up to £2,880 for each tax year. The Government then adds a further £720 tax relief, so a total of £3,600 is then invested each year.

You can pay in more than £2,880 if so desired, but the extra won’t be tax-free. Grandparents and other family members can also invest.

Other options

A regular savings account: set up a monthly direct debit into a regular savings account on behalf of a child, friend or member of family, and by the end of its run – usually a year – it will have grown into a lump sum. West Brom Building Society is currently paying out 4.1 per cent on its one-year regular saver. Norwich & Peterborough Building Society offers 4 per cent.

A stocks and shares portfolio: the European economy might be teetering on the brink of Armageddon but analysts reckon there are always investment opportunities out there BUT TAKE ADVICE.

If you think Brazilian energy stocks are worth buying because the emerging market will roar ahead, plunge in. For advice, go to a stockbroker or Independent Financial Advisor (find one in your area via unbiased.co.uk).

For a cheap way to buy and sell, visit a fund supermarket like Hargreaves Lansdowne or The Share Centre. Shares are an exciting present, but remember that this kind of financial investment is risky.