CTF - should I keep investing or move?

win3

Hi

I am new to the forums on the MSE site although i have been registered to the site for a few years. I have a question which nne of my friends can answer and thought this would be a great place to try. We have a 2 year old and pay maximum amount into CTFper year. We are just about to deposit this years worth £1,200 but given the recent changes to CTF is it wise to continue investing? I am also worried that funds will stop working hard and as such think it may be a better decision to start investing in a different type of account. Can anyone recommend which might be best?

thanks so much

parallax_20

I have been debating a similar thing for awhile and have concluded that the rate on CTF can be beaten by some regular savings accounts with no deposit limits. Plus I would still have access to the money if required, rather than have it locked away until they are 18 years.

Other than the free money the government give, which is now being stopped. I can't think of a good reason to keep putting money into the CTF account. I may resume once the interest rates look better, but would consider settings up another child account to run in parallel.

Reaper

win3 wrote: »

given the recent changes to CTF is it wise to continue investing? I am also worried that funds will stop working hard and as such think it may be a better decision to start investing in a different type of account.

That depends on whether you really mean investing or you actually mean saving. If you are putting your CTF into a savings account then I would indeed expect interest rates to decline to practically nothing as the banks lose interest in them once no new money is coming in.

If you did indeed mean investing then your CTF will be invested in funds/trackers that are not exclusive to CTFs and you can expect their performace to be unaffected.

If your CTF is in a savings account then do keep an eye on the interest rate and be ready to move it out to normal child accounts when it becomes uncompetitive. Alternatively switch it to an investment CTF - my favourite top 3 can be found here.

bob2

Reaper wrote: »

If your CTF is in a savings account then do keep an eye on the interest rate and be ready to move it out to normal child accounts when it becomes uncompetitive.

You can't move money out of a CTF savings account into a normal non-CTF child account. You can only transfer to another CTF provider (either shares or savings).

The money could only be moved out into a normal non-CTF by the child when he or she is 18.