MSE News: Child trust fund warning as vouchers set to expire

This is the discussion thread for the following MSE News Stories:

"The last set of vouchers will be automatically invested in potentially poor-paying accounts unless parents act soon ..."
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Comments

  • skelt6or
    skelt6or Posts: 14 Forumite
    Am I right in saying that if you already have a poorly invested VERY, then your child can't take out a junior isa?
  • Reaper
    Reaper Posts: 7,278 Forumite
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    skelt6or wrote: »
    Am I right in saying that if you already have a poorly invested VERY, then your child can't take out a junior isa?
    Your sentance doesn't make sense but the answer to what I think you are asking is that you can't have a Junior ISA if the child is eligible for a CTF.
  • Reaper
    Reaper Posts: 7,278 Forumite
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    Incidentally the news story is a bit odd warning parents of the final batch of vouchers to make decisions about it rather than all the many parents that have come before them.

    It also seems biased to savings accounts rather than "risky" investments wheras I would call savings accounts that pay far less than inflation (and likely to get worse with no further competition for new business) the riskier option.
  • bigjluk
    bigjluk Posts: 178 Forumite
    i have a baby due next month,does this mean there is not any funding from the government now for new arrivals.
  • ses6jwg
    ses6jwg Posts: 5,381 Forumite
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    To be fair, given the fairly strict rules around stakeholder CTFs, it is a bit misleading to describe the investments as high risk, when probably around 90% invest in FTSE All-Share trackers.
  • skelt6or
    skelt6or Posts: 14 Forumite
    When I said VERY I meant CTF (Child Trust Fund)- !!!!!!! predictive text!!

    It's unfair that my two kids who both have had a £250 voucher invested for them (which by the way is now worth less than £150) are ineligible to open a Junior ISA which has the potential to earn them a lot more money that the crappy rates the CTF is going to be getting in the future!

    Isn't this hindering my child's financial future??
  • Reaper
    Reaper Posts: 7,278 Forumite
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    skelt6or wrote: »
    It's unfair that my two kids who both have had a £250 voucher invested for them (which by the way is now worth less than £150) are ineligible to open a Junior ISA which has the potential to earn them a lot more money that the crappy rates the CTF is going to be getting in the future!

    Isn't this hindering my child's financial future??
    I disagree. You have clearly opted for the investment rather than savings route if they lost money. As such it makes no difference whether you use a CTF or Junior ISA for your investment, if they invest in the same underlying stocks the chances of them rising or falling in value are the same.

    If you were to use a savings type account then it would be true as I imagine the rates on offer to CTF holders will decline.
  • lanstrom
    lanstrom Posts: 204 Forumite
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    I invested £1,818 5 years ago in a Barclays CTF and today its worth £1,691.91 (so its LOST £127).

    So much for investing for my childs future !
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
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    as it's an investment, not a savings account, there is a risk you'll get back less than what you started with.
    I disagree.

    You started with nothing. The government gave you £250. Worst case scenario is you end up with nothing, which is no less than you started with.
    I'm assuming that you can afford to do without this money (given that it wasn't yours to start with) so I'd say the best strategy would be to go for the greatest expected value. Which, over a term of 13-18 years, has surely got to be stocks and shares linked rather than cash linked?


    lanstrom, skelt6or - I presume that you made your choice knowing that it was a stock market investment and that the value could go up as well as down. I presume that you are also in it for the long term and hopefully by the time your children are old enough it will be worth considerably more.
  • I'm embarrassed to admit that I am one of these parents with a voucher sitting in a drawer doing nothing :o

    It's been on my to do list for an age, it's only £50 though :( as my daughter was one of the last batch of kids to get it before they phased it out (born December 2010). We have already agreed to start adding to this regularly once our finances are more stable next year so we don't want anything that's too risky...I'd rather something that guaranteed a good amount for her one day. Can anyone recommend the best type of account or let me know what you chose and why?

    Thanks
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