Still scratching your head trying to come up with an inspired gift for your nearest and dearest? Well, how about a gift that may have longer-term financial benefits? Here we take a look at some options for the financially minded in your family.
Piggy bank
For smallies, it makes sense to also start small, with a piggy bank, perhaps, which can be turned into a game of finding all the small change around the house. While the days of Henry the Hippo may be no more, you can pick up a cute pig in Flying Tiger for just €4.
Be warned that’s it more for long-term saving rather than Friday treats after school. There is no hole in the bottom of the pig, but it does come with a hammer that can be used to crack it open when the time is right. See-through Vortex style piggy banks can also appeal (about £10 on Amazon).
Prize bonds
Given that prize bonds have been around since 1957, there’s hardly a household in the State that doesn’t hold some.
Some €660 million in prize bonds was bought last year, while the value of total prize bonds rose to an all-time high of €4.4 billion.
And they can be an attractive financial gift, offering the recipient the chance of winning a substantial prize. Last year, there were 228,015 prizes awarded, with a total value of €15.6 million, so an average prize value of €68. More than 4,000 prizes are awarded weekly, while the big draw for €250,000 takes place four times a year.
Prize bonds are also tax-free. Savers can buy up to €250,000 in prize bonds, or couples up to €500,000, and this is fully guaranteed by the State compared with €100,000 on deposit with other institutions.
They are sold in units of €6.25, with the minimum holding of €25.
[ Special Report: Is it worth taking a punt on the Prize Bonds?Opens in new window ]
Watch out however; despite recent rate hikes, the percentage rate currently used to calculate the prize fund remains dismal, at just 0.35 per cent. This means that this amount of the prize fund will be paid out in prizes – so about €15.4 million.
This pales in comparison to previous years; back in 2013, for example, the interest rate on offer was between 1.75 per cent and 2.25 per cent, which meant that there was a prize fund of some €35.2 million up for grabs. The fewer the funds in the kitty to be paid out in prizes, the lower the possibility of a significant prize.
Wine – but not to drink
Yes, it might be time to hit the bottle but not in the way you expect. Buying wine that might increase in value could be a novel present this year – just be sure to drop a subtle hint that it will be worth more unopened.
The Liv-ex Fine Wine 100 Index is the industry-leading benchmark for monitoring fine wine prices, tracking the price movement of 100 of the most sought-after fine wines on the secondary market. It is up by 7.1 per cent in the year to December 7th, and by 34.4 per cent over five years.
But how to pick the best wine?
Ian O’Kane works in fine wine sales in Berry Bros & Rudd’s Dublin office. The wine and spirit merchant has a platform that allows you to build a cellar and store it in a temperature-controlled facility “in bond” in the UK. It also has its own sales platform, BBX, where you can list any wine you’ve stored in bond for sale – you pay a commission if you sell a wine – and, similarly, where you can buy wine that appeals.
With such an approach, you can buy and sell wine without ever seeing it as it remains in bond. Getting it shipped to Ireland will likely trigger excise duties, etc.
Given the costs associated with storage, etc, it makes sense to have a substantial enough budget if buying as an investment. O’Kane suggests a budget of about €1,500 for a case of three bottles.
“You need to buy a certain quality,” says O’Kane, pointing to the old classics of Bordeaux and Burgundy, as well as more recent arrivals such as California’s Screaming Eagle, which are no less expensive – a 2003 bottle of the cult wine is listed for sale at £4,265 with BBR. Prestige champagnes, like Dom Perignon and Cristal (a double magnum of 2007 is listed for sale at £3,134) have also grown in popularity – and value.
O’Kane has one customer who buys a case of wine for his goddaughter every Christmas, while buying wine bottled in the year of the birth of a child is another approach.
You can also go for a “regular investment” approach. BBR has a “Better Plan” offer, for example, which has a minimum investment of £250 a month, and which allows you to methodically build up your own “cellar” over time. O’Kane suggests, however, that, typically, monthly investments will be some way higher than this, otherwise you could be saving six months to buy a case.
And if you have €1,500 or so to spend on a case of three bottles this Christmas? “Bordeaux, that’s where you start,” suggests O’Kane, adding that you could plump for the classics such as a Château Latour or Château Lafitte, buying en primeur, and holding for 10 years or so.
Château Figeac for example, was promoted to premier grand cru classé A status earlier this year, sending sales soaring, so if you had bought it some years earlier, it would likely have done well.
Shares
Another option is to buy shares. It can be very lucrative. Back at Christmas 2011, shares in Apple were worth just €11.49; fast forward to today and they’re up at €144.49.
Ideally, you’ll want the shares to be in the name of the recipient, so as to avoid taxation issues (see cash section below). But, depending on the age of the recipient, this can be tricky. DeGiro for example, stopped opening such accounts back in 2018 due to “stricter customer due diligence laws and regulations for people under the age of 18″.
Choosing the stock is also a challenge; for every Apple, there’s also a Theranos or Uber.
Books
Always a popular gift under the tree, books can also offer insights and advice in how to better manage your money.
Author, TV host and financial planner Eoin McGee has plenty of tips in How to Make Your Money Work (€13.99, Eason). He explains how understanding your own attitude towards money is the secret to effective financial planning, and making the most of your income in order to close the gap between the money you earn and the lifestyle you want.
Financial adviser John Lowe has a new, updated version of his personal finance book, Money Doctors 2022, which includes “50 Top Tax Tips” and “40 Ways to Save Cash” (€10, moneydoctors.ie).
An oldie but a goody is Benjamin Graham’s The Intelligent Investor (€18.69, Eason), first published in 1949. It focuses on value investing, and helps readers identify quality companies whose stock is undervalued and thus may be ripe for growth.
You could also pre-order Caz Mooney’s Irish Budgeting planner (€18.99), which offers insights on how her no-spend year helped her understand budgeting goals and reach her financial objectives.
Cash
If you’d rather hand over a substantial cash gift this Christmas (be it via bank transfer or otherwise), remember that, depending on the circumstances of your family, this could be classed by Revenue as a taxable gift.
While a child can inherit €335,000 tax-free from their parents, meaning no tax will likely have to be paid up to that amount, everything in excess of it is liable to capital acquisitions tax at 33 per cent. So, a family with two children with a house worth €700,000 to leave, will soon run into a tax bill.
As a way of avoiding this, be mindful when gifting at Christmas to avail of the small-gift exemption. This allows an individual to gift someone else – they don’t have to be related – €3,000 every year tax free. A couple could gift their child €6,000 this year without the Revenue being involved; or €30,000, if gifting to their child and spouse and three grandchildren.
