Kids savings

melly1980

Hi all

I have savings accounts for my children, however I had taken them out when I was much less shrewd than now.
One account is a "child trust fund - non stakeholder" with a regular monthly amount going in. Looking at the end of year statement it is paying interest of about 1%...can this be transferred over to a different type of account. The aim of this account is to pay into it until the child is 18 (now 4) so accounts that are fixed for 5 years at 4 - 5% that are on the market appear attractive.

Can this type of aco!!!! be transferred?
If not, am I as well canning it, leaving as is then opening up another one with the regular monthly amount?

Cheers for any replies.

atush

You can transfer fromone CTF to another. But equity ones should outperform cash ones in the next 14 yrs.

https://forums.moneysavingexpert.com/discussion/1918599

melly1980

atush wrote: »

You can transfer fromone CTF to another. But equity ones should outperform cash ones in the next 14 yrs.

Does it have to be a child trust fund though?

For instance the ones I have seen are called "kids regular saver accounts" and within these you have fixed rates, variable etc etc.

atush

These are cash accts and AFAIK, you cannot transfer the money into them as the money could be accessed in one year. In any case these are montly savers and not lump sum savers so wouldn't have worked anyway. As you received money from the govt that HAS to stay in an cTF of some kind until the child is 18.

melly1980

atush wrote: »

These are cash accts and AFAIK, you cannot transfer the money into them as the money could be accessed in one year. In any case these are montly savers and not lump sum savers so wouldn't have worked anyway. As you received money from the govt that HAS to stay in an cTF of some kind until the child is 18.

Right, so the best line of attack is to stop paying into the CTF and pay into a regular saver that has a fixed interest rate for 5 years then (based on my objectives...max interest rate and none accessible)

I understand that rates may go up, however they have a way to go to bridge the gap between 1% and 5%. Staying where it is, is a guaranteed "loss"

atush

No, the best would be to transfer into a better CTF and keep investing in equties. Cash is losing ground to inflation, no matter what savings acct you use.

No problem having a cash RS alongside for balance.

melly1980

atush wrote: »

No, the best would be to transfer into a better CTF and keep investing in equties. Cash is losing ground to inflation, no matter what savings acct you use.

No problem having a cash RS alongside for balance.

the CTF im using isnt equity based.

Im not interested in the whole cash versus inflation thing. This is for my children and whatever happens I dont want to lose big. If it goes into equities it could lose value plus lose out to inflation too.

If it goes as cash in anything like 5% then over the course of years it will beat inflation even if its only by the odd %.

Either of the above are better than what I have now because it is cash based and a $h1t interest rate so I am guaranteed to lose in its current format.

xylophone

Be careful about interest treatment on parental savings for children outside a CTF or other tax free product. http://www.hmrc.gov.uk/tdsi/children.htm

melly1980

xylophone wrote: »

Be careful about interest treatment on parental savings for children outside a CTF or other tax free product. http://www.hmrc.gov.uk/tdsi/children.htm

but surely if the differential is a clear 4% interest then I can not lose?

Even if the child gets taxed on the 5% interest you still have to end up with more than an account that generates 1% interest but isnt taxed?

atush

Well it is your children's money. But I invest in equities with my kids money and over 10 years it has done better than cash. And given I invest monthly has bought more duringpoor spells and later that means the funds really jump up.

But the link I gave you will be the best of all CTFs including cash.

And given inflation last year was more than 5% you lost and would have lost even more at 4%.

xylophone

http://www.hmrc.gov.uk/tdsi/example5.htm
Interest could end up being taxed at parent's highest rate.