Christmas is traditionally a time of excess. Too much eating and drinking and too many unwanted presents destined to be exchanged in the Boxing Day sales. So before the lessons of the global financial crisis are entirely forgotten, why not make this the year of the gift that pays dividends long after the tinsel is packed away.

Starting with the littlies, a piggy bank tucked in their stocking is a great way to encourage them to save for a rainy day. Or you could buy, from your local newsagent, a metal cash box that has the advantage of a lock and key to keep marauding siblings at bay.

Once they can count, introduce them to Monopoly to learn the finer points of property investing. The classic board game's only concession to the 21st century is the inclusion of an electronic banking unit, although grandma can impress the children by adding up cash in her head. What's more, for less than $80 they may learn how to entertain themselves without a remote control or a mouse. Now that's a great investment.

Shares

If you want to teach children or young adults about risk, market cycles and the value of long-term investment, then a festive parcel of shares might be all it takes to unleash the Warren Buffett within.

The managing director of WLM Financial Services, Laura Menschik, says clients often ask about the logistics of giving shares to their children.

"I usually tell them, 'If you're going to buy shares for a young person, get something they can understand and hopefully will want to follow,"' she says.

In other words, JB Hi-Fi or Billabong are safer bets than BHP Billiton.

Cost is also a factor for Santa and Mrs Claus, aka nan and pop.

The Australian Securities Exchange sets a minimum order of $500, so Santa needs to be in a generous frame of mind. Even if you buy through a low-cost online broker, you need to set aside an extra $20-$30 for each transaction.

For $500 you can buy about 12 BHP Billiton shares or nine in Commonwealth Bank. While this may prove to be a good investment and an excellent education, it doesn't add up to much diversification.

Managed funds provide instant diversification but most have a minimum purchase of about $2000, unless you are willing to start a regular savings plan. Exchange-traded funds (ETFs), which track a particular sharemarket index, offer diversification for less but indices are not terribly interesting for the average 12-year-old.

As Menschik points out, if the recipient is under 18 then the shares or managed funds must be held in trust for the child. This will have an impact on your own tax position because income from dividends, franking credits and capital gains or losses must be accounted for in your tax return.

The simplest way to buy the shares is to set up a separate online trading account under the child's name with yourself named as trustee.

"This means that if anything happens to you, the shares will automatically pass to your nephew [for example]," Menschik says. "When he turns 18, the shares will be transferred to him without capital gains tax or the need to sell. He then acquires the shares at your cost base and pays capital gains tax. When he sells them he will pay capital gains tax."

For people older than 18, you will need them to set up an account with their tax file number and you can transfer money into their account to buy shares.

A small investment in shares has the potential to become the foundation of a diversified investment portfolio. It can also teach children about the world they live in as they follow the share price and see the impact of government policy, consumer behaviour, economic conditions and management decisions.

"If they have a sophisticated mobile phone they can even check the share price daily," Menschik says. If they don't, they'll probably hit up mum and dad for the latest technology for their next birthday - all in the name of education, of course.

Gold

As the gold price hovers at about $US1200 ($1300) an ounce, a chunk of the precious metal is certain to add sparkle to your Christmas tree this festive season and put a smile on the face of anyone lucky enough to find it in their stocking.

Not only is gold a sound investment in volatile times but you can wear it, touch it and gaze at it at your leisure. That means there is a gold gift to suit just about anyone, from the love of your life to your coin-collecting dad or child.

While jewellery gives the most bling for your buck, it is not necessarily the best investment. The Perth Mint* ships gold bullion and coins to dealers and individuals around the globe. The marketing manager, Ron Currie, estimates that about 65 per cent of all the mint's sales are bought as gifts for births, weddings and other special occasions. They are also popular with grandparents who want to involve their grandchildren in their hobby.

With coins from as little as one-20th of an ounce of pure gold, a precious gift need not break the bank but you need to know what you are buying. Currie says commemorative coins are pure bullion and minted in limited editions to increase their rarity value, which means they sell for a substantial premium to their gold content and their face value.

For example, he says one of the most popular gifts at the moment, especially among Asian collectors, is a 2010 Year of the Tiger coin. A one-ounce coin sells for $2430, while a one-10th-of-an-ounce coin is a more digestible $260.

If there are fans of the beautiful game in your extended family, they may prefer the 2010 FIFA World Cup South Africa commemorative coin. Alternatively, you could start a child's collection with the Young Collector series of nine coins on a space theme, priced at $79.95 apiece.

Investment coins are also pure bullion but they are mass produced and priced close to the prevailing gold price, plus a 6 per cent premium. This means you can check the value of your gold coin on a daily basis.

Gold is held typically as a long-term investment but you don't necessarily have to lock it away for years to reap the rewards when the metal is booming, as it is now.

Currie says a popular Battle Series coin sold out quickly for less than $100 apiece recently and appeared a week later on eBay for $180.

Books

There's nothing like a book to enrich the mind as well as the hip pocket. Whether you're shopping for your eight-year-old niece or your 80-year-old uncle, your local bookstore has an investment-related title to suit.

Janene Murdoch of Melbourne's Educated Investor bookshop says people are prepared to put money into investment education.

Only moments earlier, a man walked out of her shop with a $250 book under his arm but knowledge also comes considerably cheaper.

"I can recommend two terrific books for kids this Christmas," Murdoch says.

Understanding the Investment Clock - Your Road to Recovery by Rod North (Wilkinson Publishing, $19.95) is an up-to-date explanation of market cycles, with a colourful investment clock and moveable hands on the front cover.

North, now the managing director of Bourse Communications, started his first share portfolio at age 10.

His book aims to help people young and old recognise the best times to invest and when to pull in their horns.

For teenagers, Murdoch recommends A Gift to My Children (Random House, $32.95) by Jim Rogers.

Christened the "Indiana Jones of finance" by Time magazine, Rogers founded the Quantum Fund before he was 30 and retired at 37. He went on to write A Bull in China, Hot Commodities, Investment Biker and Adventure Capitalist. He has since served as a professor of finance at Columbia University but began his business career as a 10-year-old selling peanuts and drinks at baseball games.

After having children late in life, Rogers wrote his latest book to encourage them and others to learn from his experiences.

Surprisingly, Murdoch says this year has been her best on record and puts it down to people wanting to take more control of their investments following the turmoil on global markets.

"So many people got burnt during the financial crisis," she says. "Books on self-managed super funds are selling like hot cakes as people realise you can't just give your money to someone else and say 'look after it'. You need to take responsibility for yourself."

She recommends DIY Super for Dummies (Wiley, 39.95) by Trish Power, a comprehensive, plain-English guide for all those people locked away in their study with a mountain of paperwork when they should be out enjoying the summer break.

For share investors whose lack of an investment plan was exposed during the crash, Murdoch recommends Building Wealth in the Stock Market (Wiley, $65) by Colin Nicholson.

A professional investor and sharemarket educator, Nicholson sets out the investment methods that helped him escape last year's market meltdown unscathed. If you have a friend or relative who likes their financial education delivered with a dollop of caustic wit and lashings of humanity, head to the fiction shelves for Sebastian Faulks's latest novel, A Week in December (Hutchinson, $32.95).

Faulks creates a hedge fund manager to rival Gordon Gekko for greed and ruthlessness against a backdrop of London circa 2007, reminiscent of Charles Dickens for its scope and social commentary.

* See perthmint.com.au to find your nearest dealer.

Barbara Drury is the author of Sorting Out Your Finances for Dummies (Wiley, $29.95) and co-author with James Kirby of Investing for Dummies (Wiley, $39.95).

The board game for kids that has a $1 million target

More than 20 years ago, Bernard Chapman gave his three young children shares as a gift. Now they're in their 30s, he's doing the same for his four grandchildren aged between four and nine.

"I've been putting $35 a month into CommSec accounts set up for each grandchild under their own name. One set of parents is also contributing. So long as my kids don't have too many more [children of their own], I won't go broke!" he says.

Chapman didn't start investing in shares until he was in his 40s and wishes he'd started sooner. "When [my] kids were around eight, I tried to get them interested in markets and share charts. I bought shares in my name and informed the kids that the shares were theirs. Then I sat them in front of the computer and we followed the companies' progress over time," he says.

"My eldest son was the most interested. I bought him NAB shares and fortunately I bought right at the low point and we watched it increase but that was a bit of a fluke.

"He used to come and photocopy the contract notes, dividend statements and fundamental information and kept a thick file," he says.

Chapman worked as a research scientist and manager at the CSIRO for 30 years before leaving in 1996 to develop and market his own share analysis software, Insight Trader.

"When the sharemarket collapsed [last year] I realised it was a once-in-a-lifetime [buying] opportunity and offered to provide the kids with funds. Two of them jumped at the opportunity and bought at the right time [in April this year]. They discussed some purchases with me and made some on their own that did extremely well," he says.

Whereas he bought shares for his children, he is buying listed investment companies and exchange traded funds for his grandchildren each time

their account balance hits $500. This allows him to buy a diversified portfolio that can passively accumulate over the long term.

"The idea is so they'll have $1 million when they retire. It's primarily to give them an inheritance from me but secondly to stimulate their interest in share investing. When they're old enough they will follow the progress of their shares.

"I wish my parents had done the same for me," he says.