CTF discussion area

deefadog

Hi, If you go to the footer in kallisti's post, there is a link to a great website showing you what is what with the ctf!

deefadog

Just got this through from the Motley fool -

By Maynard Paton (TMFMayn)
April 13, 2005


Even though my son can't yet add up, he's got the potential to become a millionaire.

Master P is two in June. And like most parents of young children, I've received a £250 child trust fund (CTF) voucher. And probably like most parents receiving a voucher, that's all I'll be putting into a CTF account.

You see, I have a big problem with CTFs; when my son turns 18, he gets all the money. Sure, I could teach Master P the benefits of long-term investing. Sure, I could teach him how to live below his means as well. But I know sudden windfalls tempt even the most dedicated of misers and there's no way I'm putting my cash into a scheme (the maximum CTF allowance is £1,200 per annum) and risk a hormone-fuelled teenager blow years of careful compounding on birds, booze and fast cars.

So here's my personal alternative for long-term child savings: the stakeholder pension. These can be opened in a child's name and contributions of up to £2,808 per annum can be made on their behalf. In addition, the government will throw in an additional £22 for every £78 payment. Read more.

Importantly for me, stakeholders only pay out their benefits when their owners reach 50 (or 55 after 2010). I'm sure my son will have discovered the true value of money by then. In the meantime, he'll have to learn the hard way by getting a job and saving up for his birds, booze and fast cars. He won't, however, have that many worries about providing for his retirement. This is the millionaire bit.

Say I contribute £78 a month into a stakeholder and the government tops it up to £100. By the time Master P turns 18 in 2021, his pension pot will be worth £41,509 using a 9% average annual return after charges. Assuming the same annual growth rate for the following 37 years -- and no further contributions -- the pot would grow into £1,006,752 by 2058. Granted, you can argue about future growth rates, inflation and so on, but £1m should still represent a large sum in the decades ahead.

I just hope I'm around when my son starts to enjoy it.


Hope that helps someone!

cacique

My granddaughter's voucher has been put into The Legal & General Index tracker with The Share Centre. Confirmation arrived the next day and all the people I have spoken to/emailed at The Share Centre have been really helpful and knew what I was talking about - some of the providers didn't appear to know they were providing CTFs or even what they were!!

My own 3 children each had savings certificates from their grandfather which they were given access to when they were 18. Eldest son put a deposit on a flat when he left university. My daughter spent a year in Australia when she was 21. My other son saved it for as long as he could but ended up blowing it! But two out of three ain't bad!

Speaking from experience - there isn't as much to worry about as you think!

H2SO4

I misread the link to Walkers Crips slightly, and was wondering why Walkers Crisps would be involved in savings...:)

cloud_dog

All these posts about worrying about what their child will do with the money when they turn 18.

You've got to have some faith and trust your child. You trust them not to do anything stupid everytime they walk out the front door - so you need to beleive that they will have learnt value by the time they are 18. Sure they could go and blow it on what you might consider rubbish or they may put it to a much more sensible use but, it is their choice; your job is to try to instill value and worth into them.

Again, it is their choice should they choose to blow it on rubbish but then they take the consequences of their actions, i.e. no you wont help them buy a car, no you won't support them (hugely) through college / uni they will have to get a part-time job, etc, etc. For example a child is really into DJ'ing and blows the money on a top mixing / sound system - waste of money right? We'll maybe not, if they go on to become a top club DJ or music producer in the record industry.

Life is all about choices and consequences; everyone needs to understand that.

I know this all sounds a bit fluffy and psycho-babble but you really have to trust your children and the guidance you have given them.

Having said all this I'm planning two investments (stocks/shares) that I will continue to contribute small amounts to each month. One a CTF for them (hopefully it will be for a house deposit, or Uni fees, or something to help them move forward) and the second will be for us for them (if that makes sense), i.e. wedding, etc, etc.

cloud_dog

deefadog

You may be better off posting this in the appropriate thread as this one is about the CTF for your child!

Good luck

cloud_dog

deefadog wrote:

You may be better off posting this in the appropriate thread as this one is about the CTF for your child!

Good luck

deefa, I think I'm missing your point. The point I was trying to make was that I think some people are possibly making a CTF financial decision, e.g. BS account over investing it, based on how they think their child *may* act with the money at 18.

For mine, at the moment, Family are in line to get the voucher plus some additional money as New Star are the investment managers for the fund.

cloud_dog

deefadog

NO, NO. that was not for your post

Someone had posted about where was the best place to save 50K a moderator must have moved it before you read it! LoL

Yep i agree with you!

shavedchimp

So here's my personal alternative for long-term child savings: the stakeholder pension.

Hmmm, OK nice idea - which provider though? Any tips?

Peter
aka shavedchimp

davidjwest

I've gone for stakeholder pensions for both mychildren, Amber 2 yrs 3months and Ben 3months.

We chose Virgin, one of the attractions was the low monthly payment, we only contribute £5 a month but hopefully that will be an incentive for both offspring to start contributing themselves when they start work.

If Child Trust Funds are anything to go by, then "Stakeholder" pensions may well be much of a muchness in terms of charges etc, but I'm no expert.