children trust funds

BFM

I have a few questions/thoughts about these:

we set them up for son and daughter with the gov't £250 with the intent of not doing much more.

but given what's going on in further education and the fact that we want to put something in place to make sure that we suddenly don't need to find a huge chunk of change just as we (hopefuly) are looking to retire it seems that putting some money away into these tax free seems to make sense.

so we went with HSBC funds as that is who we bank with and i couldn't see anything that showed if there was much difference between vendors (and hand on heart it was easy).

so question 1a (and b and c) - is HSBC a horrible choice, if it is can I move the accounts, and if i can move them how do I go about seeing what better alternatives are out there.

both grannies have set up bank accounts for each of the kids and put a little bit in each birthday and christmas for them but pretty sure they are earning no interest at all on these accounts.

when i was going to uni i remember getting a grand or so from each of my gran and a great aunt and it was hugely appreciated and i know they felt really good about being able to do this.

one of the problems with a CTF from what I can see is that all the payments in kind of turn into a big glob of units so you can't really see who has put in what. I'd really like to give the details to our relatives and have them pay into the CTFs but i don't think I would if the roles were reversed as I'd want the 18 year old recipient to know how much I'd put in.

are there any out there that can easily keep track of who has bought how many units.

also, i assume that at some stage before they hit 18 we can move the accounts to some sort of safer / less risky option if concerned that shares may be becoming a little volatile?

Reaper

BFM wrote: »

so we went with HSBC funds as that is who we bank with

Not usually a good way of choosing investments.

one of the problems with a CTF from what I can see is that all the payments in kind of turn into a big glob of units so you can't really see who has put in what.

Looking at the HSBC web page they send an annual statement showing what transactions have taken place, so if you keep those you will have a record.

I'd really like to give the details to our relatives and have them pay into the CTFs but i don't think I would if the roles were reversed as I'd want the 18 year old recipient to know how much I'd put in.

Now you seem to be saying the opposite and you don't want it clear who contributed?

also, i assume that at some stage before they hit 18 we can move the accounts to some sort of safer / less risky option if concerned that shares may be becoming a little volatile?

Most of them do "lifestyling", that is they start to gradually move money into lower performing but less volatile investments as the end date approaches. If HSBC do this then you have no need to.

Finally remember the maximum that can be contributed is £1200pa from all sources.

BFM

i agree that going with hsbc because thats who we bank with was not a good ploy (and admitted to my laziness in the initial post)

in mitigation I couldn't see anywhere to compare different vendors (as was not really regularly looking at this site at the time) and when we set them up it wasn't really going to have much going into it other than gov't freebie.


rereading my initial thread it is admittedly a little rambling, so to clarify, I want a fund that clearly shows exactly who has purchased the units, ideally on an ongoing basis so i don't have to maintain an ongoing spreadsheet (but if I can easily pick out who did what on an annual basis I'm not against that) - we aren't at the hsbc anniversary so haven't seen what reporting they do yet, but obvioulsy I'd prefer someone else to do that work for me...

is the £1200 per year fixed or are they likely to increase that on a similar basis to ISA allowances?

Reaper

BFM wrote: »

i agree that going with hsbc because thats who we bank with was not a good ploy (and admitted to my laziness in the initial post)

At least you did not do what many did and put it in a savings style CTF. I would expect an investment version to be a better bet over the long term, particuarly as I expect the rates on the savings versions to decline.

I want a fund that clearly shows exactly who has purchased the units, ideally on an ongoing basis so i don't have to maintain an ongoing spreadsheet

I'm afraid there is no way of telling what information the companies provide about contributions other than asking them, it doesn't tend to go into that much detail in their brochures. It might be a contribution list, or it might well have the account numbers (and perhaps even names) of the accounts it came from.

is the £1200 per year fixed or are they likely to increase that on a similar basis to ISA allowances?

While I can't predict what the government will do they have not said the limits will increase in the future and I think it highly unlikely that they will in view of the fact they have stopped any more CTFs being taken out.

If it may be a problem there are other options such as Child ISAs coming soon, and trust funds for children (not CTFs) available now.

cloud_dog

Reaper wrote: »

If it may be a problem there are other options such as Child ISAs coming soon, and trust funds for children (not CTFs) available now.

Just to add....... it is thought (hoped) that CTFs will convert to 'junior' ISAs.

BFM

still unclear if you can switch these things around like you can with ISAs, and if the HSBC offering is a good, ok or poor option.


i guess if the answer to the first part is a no then the answer to the second part is kind of redundant....

BFM

cloud_dog wrote: »

Just to add....... it is thought (hoped) that CTFs will convert to 'junior' ISAs.

that would be very cool. how long have these things been around? ie. are there 18 yr olds now who are beginning to have them crystalise?

cloud_dog

BFM wrote: »

still unclear if you can switch these things around like you can with ISAs

You can transfer CTFs between CTF providers. Obviosuly there may some constraints placed on it by an individual provider but you would need to check this out. Never investigated if you can transfer a S&S CTF in to a cash CTF but would like to think you can.

BFM wrote: »

....and if the HSBC offering is a good, ok or poor option.

You need to do the work here. Find out what fund/tracker it is invested in then use Trustnet or Morningstar to compare it to its peers.

BFM wrote: »

that would be very cool. how long have these things been around? ie. are there 18 yr olds now who are beginning to have them crystalise?

They've been around for about 7 years (forget the exact intro date).

Reaper

BFM wrote: »

still unclear if you can switch these things around like you can with ISAs, and if the HSBC offering is a good, ok or poor option.

You should be able to switch them around. I'm not very familar with the HSBC one but the 2 main criteria are:
1) What are the fees? I believe your is a "stakeholder" type and therefore and charges the maximum allowed, as most do: 1.5% pa. Being a stakeholder means it will do the "lifestyling" I mentioned earlier.
2) Where is it invested? In your case I believe it is the "HSBC UK Growth & Income Fund". You can compare its past performance with others on various charting sites but from a quick look it apears to closely track the FTSE All Share index.

i guess if the answer to the first part is a no then the answer to the second part is kind of redundant....

A while ago when I was looking I came up with this short list. If you want to transfer and if these accept transfers in you could consider these for your shortlist. The main reason for changing would be if you wanted to invest further afield than the UK, or more adventurously than a Uk Tracker. If not stay where you are.
http://forums.moneysavingexpert.com/showpost.php?p=34505779&postcount=5

BFM wrote: »

that would be very cool. how long have these things been around? ie. are there 18 yr olds now who are beginning to have them crystalise?

Not that long. Only about 6 or 7 years from memory.



EDIT: Cloud Dog beat me to it.

MrEnglish

Did you know you can put the 250 into a silver ETF through selftrade.

I did that several months ago and it has doubled already and looking like to continue going up at the same rate it is.

cloud_dog

Reaper wrote: »

EDIT: Cloud Dog beat me to it.

Result....