The Royal Mint has launched a new gold backed savings account for children, called Little Treasures. Royal Mint says it is the first of its kind in the UK and follows a record year for precious metal sales.
Little Treasures is an online account which enables adults to invest in fractional gold for children aged 0-18 years old. All of the gold is VAT free and safely stored in The Royal Mint’s purpose-built vault which it claims is one of the most secure sites in Britain. The account is a way for new gold investors to build a nest egg for children, accumulating a digital precious metals holding.
According to its research, The Royal Mint says 46% of Brits admit they are less likely to buy physical gifts for loved ones than they were in 2019. Instead, 55% are looking to put money spent on Christmas presents into saving funds for their children to enjoy at a later date.
Data from The Royal Mint reveals that adults who invested £25 a month in gold over 18 years between 2002 and 2020, would have accumulated £13,393 in gold savings. When compared to putting the same amount into a 2% cash ISA it would have accumulated £6,493, while simply setting it aside with no interest would leave savers with £5,400.
Investors purchase fractional gold to the nearest 0.001 ounce, subject to a minimum order value of £25 and investors can review their savings via their online account. Payments can be made via regular standing orders, or as one-off transactions. The digital gold can be converted to cash or physical bullion to gift at any time. Fees are: to buy 0.33%, to store 0.5% + VAT and to sell, 1%.
Invoices are issued quarterly and will be settled from customers’ available account balance. If there is not a sufficient balance to cover the cost of storage, the account will be in arrears until the balance is paid. Funds can be added to an account using debit card or bank transfer.
Estimated annual storage charge on £50 per month – from 1-18 years
YearTotal value of gold heldFlat annual rate Estimated quarterly fee excluding VATVAT at 20%Estimated quarterly fee including VAT
Andrew Dickey, divisional director of precious metals at The Royal Mint said: “One of the most precious gifts you can give any child is to help secure their financial future. Backed by the reputation of our gold bullion bars, a store of wealth trusted by banks and intermediaries all over the world, we’ve designed a digital gold accumulation account where you can save for the next generation. Investors can watch their loved ones grow knowing they’re building a golden nest egg to help give them the best possible start in life.
“It is really interesting to see that Brits are planning to gift differently this Christmas, in light of how the world has changed. And, at a time when planning for our children’s future is more important than ever, our new Little Treasures investment product will allow parents, grandparents and loved-ones to invest a little each month in gold – a precious metal that’s increased in value over time.”
The Royal Mint has been expanding into the precious metals market over recent years and has seen record sales of physical and digital gold in 2020. The company now offers a wide range of physical and digital gold investment products, including DigiGold which enables investors to buy fractional gold online, and a gold backed ETC in conjunction with HanETF.
Kay Ingram, director of public policy at financial planners LEBC said: “While the past performance of this investment compared with cash alternatives may look attractive, the fees charged for storage and selling costs are not. If taking a long-term view then a global index tracker fund with charge as low as 0.15% per annum and no set up or exit fees may prove a better investment, giving access to a wider range of liquid assets.
“Placing a global equity tracker fund in a Junior ISA would make the investment tax free or investing in it through a personal pension, into which children can invest up to £2,880 per year, would mean 20% would be automatically added by HMRC turning it into £3,600 instantly. So not so glittery as gold but a touch of Christmas magic which can continue to grow tax free for many years to come.”
Further reading: Gold Exchange Traded Commodity from Royal Mint
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