Which CTF

fattony

I've had a look through the which website and one ctf they suggest is:

http://www.esbs.co.uk/young-saver-accounts.html#one

What is the difference between stakeholder and non stakeholder?

edit:

stake holder is invested into shares, how do you make this decision, we could lose loads of money or we could make loads, bump is just a few weeks old so we have plenty of time just want to start ball rolling

Mikeyorks

The basic choice is 'cash' or 'investment'. The 'investment' divides into stakeholder or not. The 'stakeholder' meets certain Govt criteria. Rather than repeat it all I think you should read this from the main site :-

http://www.moneysavingexpert.com/savings/child-trust-fund-vouchers

.... and particularly this which covers the distinction between stakeholder and otherwise :-

http://www3.moneysavingexpert.com/files/ctf_guide.pdf

It all depends if you're going to add funds to the Govt contribution .... or not. If you aren't (possibly sensible as otherwise you have no jurisdiction over funds you save) then it seems to matter little as £500 isn't going to grow to full Uni funds no matter how saved? If you are going to add .... I'd personally go for an investment ISA as likely to well outperform cash over 18 years.

fattony

we intend to save each year, not sure we could achieve the full £1200 a year but would be nice to save £600 at least, so a cash ctf would be my best bet?

£600 would only give us roughly £10k as years pass we may be able to put more in

Mikeyorks

As my last sentence on earlier thread .... over 18 years I would go for the Investment. Probably the stakeholder if you're uncomfortable choosing your own funds.

The sort of funds they invest in have made me 40% (net) since late April ... and my wife's is standing at 35% over a slightly longer period. That level of increase will not continue ..... but it's certainly beating the max 2% gross I would have had from cash.

fattony

I was a little confused but think Im getting it now, the ISA isnt a cash ISA its a investment ISA - I assume thats stakeholder, just dont want to make the wrong decision

This was taken form the which website:

Most stakeholder CTFs charge the maximum annual management charge they are allowed to do which is 1.5% (which is some cases is more expensive than share-based accounts).

This means that stakeholder CTFs must grow by 7.5% a year, just to match the best cash CTFs, which given their investment strategy will be hard to do - especially after the fund is 'lifestyled'.

Stakeholder child trust funds do offer a convenient way to invest in stocks and shares, but their low-risk investment strategy combined with their high charge means the funds will have to work consistently very hard indeed to beat the best cash rates currently available.

So a stakeholder may not be the right decision?

Mikeyorks

fattony wrote: »

So a stakeholder may not be the right decision?

I think 'investment' is the right decision with 18 years to go. If you're comfortable with choosing your own funds then you go for the non-stakeholder to mitigate costs / enhance (hopefully) the yield? Otherwise it has to be the stakeholder.

Don't know how long ago the Which article was last reprised as the '7.5% growth' implies around 6% on cash? The best on offer is 50% of that.

But go for cash if you want safety. But be prepared to switch around a bit - over the years - to follow the better rates.

fattony

Ok so who would be a good company to use for a stakeholder ctf?

Mikeyorks

If you look at the .pdf link I gave you above ..... Family Investments or Childrens Mutual are options. I notice the latter is Moneyfacts 'CTF provider of the year' for 2007 / 2008 and 2009 .... if that's any sort of tribute?

For other ideas .... have a look at the thread on CTFs :-

http://forums.moneysavingexpert.com/showthread.html?p=24735095#post24735095

There's a full list of providers on the Govtsite here :-

http://www.childtrustfund.gov.uk/templates/Page____1243.aspx