CTF - please could somebody review my thinking

funkyfin2000

£25 would be fine as myself and wife could invest in that account, where as our relatives/family could invest in the CTF stakeholder we set up.

I notice you talk about the bare trust but the trustee still only has control until they are 18 according to the baillie gifford site!?

Thanks again Reaper, you have been most helpful to my dumb questions.

funkyfin2000

Ignore me, I have read your 2nd post properly about the age.

Did you go for bare trust then Reaper?

Reaper

funkyfin2000 wrote: »

£25 would be fine as myself and wife could invest in that account, where as our relatives/family could invest in the CTF stakeholder we set up.

Actually I suggest you do the reverse. There is a sneaky little tax rule that says if the child's savings/investments earn more than £100 income and the money originally came from the parents then the whole lot is taxed as if it is the parent's money.

This does not apply if the money came from other relatives (eg grandparents) and does not apply to the CTF. So tax wise you would be better off with parents contributing to the CTF and relatives to the other investment (you can still be the trustees - the ones who operate it).

I notice you talk about the bare trust but the trustee still only has control until they are 18 according to the baillie gifford site!?

Once you get the application form it actually says it will run to age 18 or any other later date which you specify - you just enter the date in a box on the form.

And yes I went for the bare trust.

funkyfin2000

How very handy.

Great advice once again. I can't say thanks enough

Really we would like to max out the CTF a year so we could invest £100 a month in to it to max out the £1200 a year (although we may not be able to afford that directly, so may need some support from relatives to top it up with us)

Then we could get the relatives/other family to add in to the Bare Trust.

Is the baretrust basically another stakeholder account? What kind of rates does that baille one pump out? What investments did you choose?

Rich

Reaper

funkyfin2000 wrote: »

Is the baretrust basically another stakeholder account?

There are 2 parts - an investment which you, your child or Joe Blogs could invest with + a bare trust. In theory the bare trust could be applied to almost any form of savings or investments. It just means the person operating the account is not the same as the person benefiting from it.

What kind of rates does that baille one pump out? What investments did you choose?

You will find the past performance figures and graph on their web site, just click on the Factsheet icons on this page.
At present I only have a small amount in there so I was a bit boring and started with the one with the lowest charges - Scottish Mortgage. When I have more money in there I will be a bit more selective and spread it round a bit. I liked the sound of Monks but recently it has not justified the slightly higher charge. Maybe Pacific Horizon for a small amount, I haven't really decided much except to stay well away from the Japanese funds - I don't fancy Japan as an investment right now.

Reaper

Perhaps I should mention the main difference to a CTF (which may or may not be the stakeholder type) is tax. CTFs never incur tax whereas having a seperate child investment can. First there is the £100 income trap mentioned previously, but even after you have avoided that the investment belongs to the child and is taxed as part of their affairs. Though since the child gets all the same allowances as an adult and is not earning or doing anything else to use up their allowances it is not likely to be an issue for many years, if ever.

funkyfin2000

Reaper wrote: »

Right I've done my research and below are what I think are the best options in each category. Add the usual disclaimers about these being my opinions not financial advice blady blah...


Stakeholder with UK only tracker
The Winner: F&C with their FTSE All Share Tracker (Web site, Key features PDF)
Why? Lower charges than everybody else. TER of 0.35% + 0.7% plan charge which is less than the 1.5% everybody else charges. The effect on a growth of 7% over 10 years would be to reduce it to 5.9%. I don't think you will find cheaper.

Stakeholder with worldwide trackers
The Winner: Family Investments
Why? Rather than just being a purely UK tracker they use worldwide trackers covering the UK, Europe, Asia Pacific, and USA.
Charges are the usual 1.5%

Non-stakeholder shares CTF:
The winner: F&C CTF Shares account, investing in the F&C Investment Trust. (Web site, Key features PDF)
The fund invests in UK & Global.
Various charges, but the effect they have on 7% growth is to reduce it to 6.3% on regular savings.
In total there are 13 different funds to choose from but some of the others are very expensive. e.g Managed Portfolio Trust's growth would see that 7% growth reduced to 3.8% by the charges!!
Note you can switch to their stakeholder version at any time - something to consider at age 13 if you want to make use of the "Lifestyling" that is always applied to stakeholder plans (a gradual shift over to safe investments).

Note investing with F&C outside a CTFs is even cheaper but that's no good if you have a government voucher to spend plus I believe CTFs can be converted to ISAs when they mature.

If anyone has other ideas about the best in each category or wants to add to it (eg an Ethical funds category) then post away.

Reaper, would you say in your opinion the F&C share account is still the best option in the market for cost etc?

Cheers

Rich

Reaper

In my case I did a lot of research for my own child. It is of course a snapshot of the best products available at that time and I have not been looking since to see if anything has changed.

Having said that with CTFs being ended it seems highly unlikely any company will have launched any new products in the meantime.

As far as costs go as I said the costs are only low with that option if you are happy to select your investment option as "F&C Investment Trust" as the other options are more pricey. I was happy to do this as it has a long track record - the longest in fact as it was the first ever fund and began life in 1868. Not bad considering many Unit Trust funds seem to last very short lives.

funkyfin2000

Interesting, thank you for your input again.

Do you mind if I ask what areas you invested in, did you go risky or have a spread?

Rich

Reaper

Do you mean for the CTF or the separate investment we discussed previously?

In both cases I have started simply as the amounts are small though I may branch out in time as the size of the capital grows.
CTF shares account - all in the F&C Investment Trust (the other options have much higher costs)
Baille Gifford bare trust - all in the Scottish Mortgage fund

These are of course my personal choices and may not match your attitude to risk and willingness to pay higher fees in the hope of higher returns (they are both the cheapest options and both likely to give solid rather than volatile/stellar returns). Just because I chose those ones does not mean they are the right ones for you.