Childrens savings performance?

jellykelly_2

I have opened two ctf accounts and looking through their performance one has made approx. £600 over a 5yr period and the other has made approx. £1000 over a 6yr period.


Based on high interest savers is this classed as a good performance?

puk999

What contributions have been made to the accounts?

Macca83_2

You would need to give us more info.

Archi_Bald

How much was paid in when?

jellykelly_2

the 250 ctf, approx. £400pa with an additional £1000 one off lump sum.

jellykelly_2

£360 pa is a more accurate figure altho the older one had over £400 paid in for the first 2 years.

jellykelly_2

I've paid in approx £350 and it's bal on the last statement is £4525 of the older CTF. The other ive paid approx £2500 and it's currently worth £3160. Bothe have accrued a couple of loses but since 2012 have performed very well.

jimjames

So is it savings or investment?

What are they invested in?

innovate

jellykelly wrote: »

the 250 ctf, approx. £400pa with an additional £1000 one off lump sum.

jellykelly wrote: »

£360 pa is a more accurate figure altho the older one had over £400 paid in for the first 2 years.

jellykelly wrote: »

I've paid in approx £350 and it's bal on the last statement is £4525 of the older CTF. The other ive paid approx £2500 and it's currently worth £3160. Bothe have accrued a couple of loses but since 2012 have performed very well.

You need to supply the dates for each of the payments (by you or by someone else) made.

bowlhead99

You've spread out the numbers in a few different posts in quite a confusing way but I'll just make some assumptions:

Older CTF:
Started 31/3/2008 with 250 from govt and 1000 lump sum
"£360 pa is a more accurate figure altho the older one had over £400 paid in for the first 2 years. "
year 2008/9: 405 contributed
year 2009/10: 405 contributed
year 2010/11: 360 contributed
year 2011/12: 360 contributed
year 2012/13: 360 contributed
year 2013/14: 360 contributed
value at 31/3/14: 4525

Total contributions by jellykelly: 3500. Free cash from government 250. Total invested 3750. Total value today 4525. Total investment profit 755. Approximate annualised percentage return (IRR) based on those dates: about 6%. In other words if you had put that money on those dates into a bank account paying 6% annual equivalent, you would have ended up with the 4525.

Then the newer one - you say this has been going for 5 years and you've been putting in 360 a year plus 1000 lump sum but then you also say you've only paid approx 2500 total. As that maths doesn't quite work I assume you didn't start making your 360 per year contributions right from the beginning:

Started 31/3/2009 with 250 from govt and 1000 lump sum
year 2009/10: 60 contributed
year 2010/11: 360 contributed
year 2011/12: 360 contributed
year 2012/13: 360 contributed
year 2013/14: 360 contributed
value at 31/3/14: 3160

Total contributions by jellykelly: 2500. Free cash from government 250. Total invested 2750. Total value today 3160. Total investment profit 410. Approximate annualised percentage return (IRR) based on those dates: about 4%.

The returns on the first CTF do not look outstanding and I would say the ones for the second CTF, look pretty poor. However, you mention they have both had losses along the way and and then done better since 2012, which reminds us that they are invested in 'the markets' to an extent - even if you won't tell us what they are actually invested in so we can put it in context with how other products with the same risks have performed.

If we take the first one: six years ago, Easter 2008 was one of the worst time in the last decade to put your £1000 lump sum and £250 from the government into the stock market. If it was just invested in big companies in the major stock markets in the world, probably what happened was that it lost 40% over the year that followed.

So if we don't think of that lump sum as £1250 invested for 6 years from Easter 2008, but instead £750 invested for 5 years from Easter 2009, you have achieved your eventual profits from a much smaller pot. With that simplified assumption, running the numbers again would show that this fund returned an annualised 12%+ since 2009. That's not the best possible result you could have had, but it is not bad. If it makes double digit growth in the better years it can afford the odd market crash, and if you continue on through boom and bust until the child is 16, 18, 20, whenever, you should do well. Overall you have beaten cash savings and should continue to do so.

The CTF is a niche product but from next April they plan to relax the CTF rules and let you convert it to a junior ISA. This will hopefully give you a cheaper set of products to invest in, because of the increased competition in the market.

The second CTF for the younger child seems to have done quite poorly for a stocks and shares product.

If it has been invested over the five years since 2009 in the stock market (and five years ago this month was pretty much the bottom of the market after the credit crunch), you would expect it to do pretty well. Everything is now worth more than it was in 2009 and 10%+ compound return every year would be well within reach. However, turning your 2500 plus the government's 250 into only 3160 total is nowhere near that. I presume it was a more cautious fund. Maybe you chose it after seeing some losses on the first product. If it was the exact same product as the older fund, I would be surprised.

However, it does depend on the exact timing of when you put the cash in (for example if you only put the lump sum in last year, rather than 2009, it has produced your returns from a smaller average amount of money). So we are only guessing.

One final comment, you said "based on high interest savers are these classed as good performance". If these have produced some losses along the way they are not the same thing as high interest savers. They are not supposed to perform the same.

In any one year they might produce more or less return than a high interest saver, but in the long term, the fact that you are taking risks mean the rewards should be greater. So after 6, 10, 15, 20 years you will likely get a better return from this sort of product than from leaving it in a bank (not to mention the free government cash which you couldn't have put in a high interest kiddie saver anyway).

westy22

Bowlhead99 - "Special Mention in Despatches for going Above and Beyond the Normal Call of Duty" :beer: