CTF ponderings - ISA / S&S ISA etc

Tammy2

Come 6th April I'm wondering about switching my daughter's CTF to a cash ISA or S&S ISA.

DD will be 8 1/2 years old, so I think less than 10 years to run on junior ISA products. (Although a few do seem to go on later - Halifax cash JISA for instance).

Because of the relatively limited time period, do you think it would be wise to go for the cash option?

jimjames

Tammy2 wrote: »

Because of the relatively limited time period, do you think it would be wise to go for the cash option?

Personally, no.

You still have nearly 10 years and I think equities will perform better than cash over that time.

bowlhead99

Personally for a timescale of a decade I favour S&S, however I don't know if your child is going to need to spend the money on university fees and living costs at 18 or a car at 20 or a wedding at 30 or a house at 35. If you are only starting in earnest now then one factor to be aware of is that £100 now has a decade to grow while £200 invested at age 17.9 years only has a few weeks to grow, if it's being taken back at age 18. So on average the full money is only invested for 5 years.

If you don't think the child will want to wait for an improved capital return at age 18 then you would probably go for cash and / or lower risk investments now and perhaps cash only later. A child can have both types of ISA of course so you could do half in cash and half in S&S, vary the split over time if you want, and tell them to spend the cash bit first while keeping the other bit to grow another 5 years. Whatever stays in cash is subject to greater inflation risk than investments, which should outperform cash if they can be left long enough.

Kendall80

In addition to the above well considered responses I would add that you consider utilising your (or other halfs) unused ISA allowance. This way you retain greater control when your daughter reaches 18. Like you I shall be transferring my boys CTFs to a JISA (S&S) but we shall not be contributing extra. Instead we are using Mrs K's ISA. This way the 5-6k each in their JISAs can upon turning 18 be theirs to do with as they wish but the extra 15k will be at our discretion. (Approx. amounts)

Tammy2

Thanks all. I will have a look at S&S JISAs.