Should you give your grandchildren Premium Bonds… or Bitcoin?

Premium Bonds have long been a popular present for relatives wanting to gift a savings habit at Christmas.

But a poll today reveals just as many of us are thinking of buying cryptocurrency as a gift this year.

The survey, by investment firm AJ Bell, revealed one in 50 of us plans to buy either NS&I Premium Bonds or cryptocurrencies such as Bitcoin.

Gamble: Cryptocurrencies such as Bitcoin are so risky that the value of a gift given on Christmas Day could be worth considerably less by the time the Queen’s Speech is broadcast

Yet the latter are so risky a gift given on Christmas Morning could be worth far less when the Queen’s Speech airs.

Premium Bonds pay prizes at an equivalent interest rate of 1 per cent. Each bond gives a saver a shot at a £1 million prize every month, but winning is not guaranteed.

Bitcoin has increased in value since last year, turning £30 into £56 today. Yet earlier this month it fell by around 20 per cent after peaking in November.

Laura Suter, from AJ Bell, says: ‘It’s a clash of the old and the new. Both involve a bit of a gamble, as the value of Bitcoin has been volatile and Premium Bond prizes aren’t guaranteed.

‘But Premium Bonds are guaranteed by the Government and you can’t lose your money. It’s the safest way of saving. Cryptocurrency is not guaranteed, and the value could fall to zero, meaning you lose it all.’

Kevin Brown, savings expert at mutual Scottish Friendly, adds: ‘The number of people gifting cryptocurrency may seem low, but in terms of how many people are invested in crypto this is the tip of the iceberg.’

Cash remains the most popular choice, with more than half gifting it this year, according to the survey.

Yet a growing number of parents are sending links to their children’s accounts via text, WhatsApp and email so relatives can pay in directly.

Illustrator Cathy Dafforn recently shared a link to her baby son’s tax-free Junior Isa (Jisa) with relatives. Cathy, 37, says: ‘Connor is only 14 months and has a room full of toys already. 

When my sister asked on the family WhatsApp group whether to buy him a present or send some money, I shared the link to his Jisa.’

Those who click on the link to the AJ Bell Jisa then enter Connor’s name and date of birth, plus their own details including name, address, email and card details to make the payment. Cathy’s father was the first to add funds for Connor’s first birthday.

Premium Bonds pay out prizes at an equivalent interest rate of 1%. Each bond gives a saver a shot at winning a £1m prize every month

Premium Bonds pay out prizes at an equivalent interest rate of 1%. Each bond gives a saver a shot at winning a £1m prize every month

She says: ‘It is as easy as online shopping, and relatives can pay in without asking for any details. As it’s a stocks-and-shares Jisa, the money should grow and when he is 18 he can do something useful with it. ’

Dani Kumrou, 35, has also sent links to her 11-year-old daughter’s GoHenry account via text to family. The pocket money app allows parents to create a ‘giftlink’ that can be shared with friends and family. The link takes people to a page to make a secure payment.

Dani, who runs her own health and wellbeing company, says her relatives do everything on their phones, so no one had issues with the app.

She says: ‘I think the way we view money is changing. When I was younger it was all about notes, but children are growing up with apps. Ellie-Rose is at an age where she’s difficult to buy for. Sending money means she can buy what she likes.’

If you must send cash, make sure it is packed securely and can’t be seen from outside the envelope. Coins are best avoided.

Royal Mail suggests sending by Special Delivery Guaranteed which offers compensation for loss.

A 100 g letter guaranteed by 1pm the next day costs £6.85, or £6.75 online, and covers up to £500.

You could send a cheque, but with bank branches closing, it may also be hard to pay them into accounts.

Some banks will let you take a photo of a cheque through apps and deposit it that way.

You can pay directly into someone’s account but you will need their account number and sort code.

A deposit can be made into a child’s Jisa by phone or via the provider’s website if you have their account number, name and date of birth. 

If you paid £20 into your baby’s stocks-and-shares Jisa every month from when they were born they would have £6,401 at 18, based on 4 per cent growth.

Premium Bonds are entered into a monthly draw with around 3 million prizes. For each £1 bond, the odds of winning anything are 34,500 to one.

Anyone can buy bonds for under-16s but you must let their parent or guardian know, as NS&I will contact them for proof of ID and address. 

Apply online at nsandi.com/products/premium-bonds#product-modal-apply, by post, or call 0808 500 7007. The minimum investment is £25.

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