BABY’S FIRST CHRISTMAS

Welcoming a new grandchild can be so special. Here’s how to give a gift that goes on giving to younger members of the family

Buy a smaller gift in your grandchild’s early years and put the rest of the money you’d plan to spend into a savings account. This way you’ll grow a small nest egg for them by the time they want to buy something special – like their first bike.

You can either ask their parents if they’ve already got a savings account and pay money in, or set one up yourself.

If you’re intending to pay in regularly, then a Regular Saver may be the best option. The Halifax Kids Monthly Saver pays 4.5% if you pay in from £10 to £100 a month and the money can’t be touched for a year.

The Saffron Building Society’s Children’s Regular Saver pays 4% if you pay in from £5-£100 a month, and withdrawals are allowed with this one. If you don’t live near a branch, you can set this up as a postal account.

If the proud parents have star ted a Junior ISA, grandparents can pay in too, although the overall limit for this tax year is £4,260. The money is locked away until they are 18 so they can’t dip into it!

Or how about buying Premium Bonds for them? You’ll need a minimum of £100 and the bonds must be held in your name until the child reaches 16. But with monthly prizes from £25 up to £1 million, it could mean a big nest egg if you get lucky – plus winnings are tax-free!

It’s probably unlikely most of us will be thinking about setting up a pension fund for a new baby, but it’s possible and long term, can be a savvy way to invest for their future.

With a Stakeholder Pension you can pay in up to £2,880 a year (which grows to £3,600 after tax relief). If you star t from day one and pay in the maximum until they’re 18, they could be looking at a pension pot of over a million pounds by the time they retire according to investment company Brewin Dolphin.