CTF or new children's investment or ISA?

Mikki

I have 3 children - 2 of them were eligible for the CTF at the time so have one, and my eldest has a Children's investment plan, all with F&C.

I've never topped them up, but am now in the situation where I can add a little each month to them. However, now that CTFs have been done away with, I'm wondering whether it makes sense to add to the existing ones, or to open up a new investment plan for them.

I'm just thinking that the range of investment funds available for the CTF are gradually diminishing, and that I may have better choice doing something else.

I was also wondering if it might be better simply using my ISA allowance (not going to use it up with my "own" savings) and opening a S&S ISA with the money instead (obviously technically mine but with the intention of giving to the children once they reach 18). Is there any reason why I couldn't or shouldn't do that?

Thanks

Reaper

Mikki wrote: »

I'm just thinking that the range of investment funds available for the CTF are gradually diminishing, and that I may have better choice doing something else.

Are they? I see no reason why they should. The investment CTFs simply use existing funds so unlike the savings type CTFs there should be no disadvantage in continuing to use them now new ones are no longer available. I too use F&C and last time I checked the funds available to choose from had not changed.

I was also wondering if it might be better simply using my ISA allowance (not going to use it up with my "own" savings) and opening a S&S ISA with the money instead (obviously technically mine but with the intention of giving to the children once they reach 18). Is there any reason why I couldn't or shouldn't do that?

None, and it means you have more control over when they get the money but be aware:
1) It uses up your own ISA allowance which you might want to use yourself and some point.
2) You might want to mention in your will that the money is intended for the children.
3) If the value of your estate is over the inheritance tax thresholds then inheritance tax may be payable on the money if you die before handing it over or for up to 7 years afterwards.

Malski

There is supposingly an ISA coming out towards the end of the year which is for Children.

Reaper

Yes, the Junior ISA. But your 2 kids who have CTFs will not qualify for it, it is only for those who were unable to take them out.

Mikki

Thanks.

I've been thinking again about whether it is really worthwhile saving specifically for my children. I'm never going to be able to save huge amounts to make it worthwhile, for example to pay tuition fees etc, and I've always been a little bit uncomfortable with the idea of handing over all the money once they're 18. I know when I was 18 I probably would not have appreciated all the effort that went into saving a substantial amount, and would have quite happily spent the lot travelling or something, or just wasted it!

If they really want to go to uni then they could get a student loan or whatever will be available then; as I said, the amount that I can save is never going to be enough to cover the whole amount.There is also the argument that kids should learn to save themselves, learn to appreciate the value of money etc. However, it would be nice to be able to help them out if need be, be it to buy a car or part of a deposit for a house or help with a business idea or whatever. Although I managed without any help from my parents (well, I did live with them while at uni!) - I had no lump sum when I was 18 - is it really neccesary? Hmm I don't know!

I already save monthly for each of them in the Halifax childrens regular saver, and at the end of the year the plan is to put this money into their CTF / CIP. But going back again to saving into my own ISA - this is becoming more appealing as a) I get to control the money and b) it's not tied up till they're 18 and I can access it if it was a real emergency. So I'm beginning to think about saving the extra I now have available to save into my own S&S ISA, and there will (hopefully!) be a bit of money available when they're older if needed, rather than individually into their own CTFs / CIP (though I'll still do the regular saver and top up their CTFs each year I think). The only problem with that though is working out who would get what!