Child Trust Fund to Building Society Account?

Jeepers_Creepers

Hi.

I currently have a CTF Stakeholder account with F&C running for my 12 year old child.

Just looked at the most recent statement;
Previous value £4k (a year ago)
New Subscriptions £300,
Management fee £25,
Increase in value of investments £21
Total new value £4,296

So, all it has increased over the past year is by less than the amount we've put in to it.

Pretty keen, then, to move this!

A Q, please. If I transfer this to a Junior ISA (the best giving almost 3%), can I stop adding monthly payments to it and just keep it at the 'transfer' value? (The reason I ask is because the very best deal I can find at the moment is a straight forward child-saver account with the Halifax which is giving a full 3%, so I'd like to put future payments in there instead. I'd love to move this CTF sum in to that saver account too, but I know I cannot.)

Thanks.

xylophone

If you have an ISA with the Halifax, then 4% is available on the JISA.

Otherwise 3%.

Nationwide offers 3.25%..... See http://www.money.co.uk/savings-accounts/junior-isas.htm

Jeepers_Creepers

Many thanks, Xylophone.

I saw the Nationwide one but not the Halifax. Hmm, time to take out an ISA of our own, then!

Great stuff - many thanks.

I think I got the answer to my other Q too - an ISA can simply be given a lump sum, and doesn't necessarily need regular payments.

Cheers.

(Argh - I don't think the Halifax allow transfers from CTFs to their Junior ISAs... :-( )

xylophone

Argh - I don't think the Halifax allow transfers from CTFs to their Junior ISAs..

Are you sure? See http://www.halifax.co.uk/isas/cash-isas/junior-cash-isa/


Existing Child Trust Fund holders can’t hold a Junior Cash ISA at the same time. However, from April 2015 they can apply to transfer the full balance in their existing Child Trust Fund to a Junior Cash ISA in branch, as part of the application process.

Jeepers_Creepers

You are soooo right :-)

I'd started the process on-line before coming across the Catch-22. But, as you say, sorting out both (starting the JISA and arranging the transfer of the CTF) should be doable over the branch counter.

Many thanks - really appreciated :-)

Reaper

Woah, slow down. That might or might not be the best move.

Jeepers_Creepers wrote: »

So, all it has increased over the past year is by less than the amount we've put in to it.

Pretty keen, then, to move this!

So it fell slightly in value over 1 year and you want to quit? This is an investment, that means in some years it will go up and in some years it will go down. You don't quit the first ever time it drops, and it only dropped by £4!

Jeepers_Creepers wrote: »

I currently have a CTF Stakeholder account with F&C running for my 12 year old child

By opting for the "stakeholder" version you are in a FTSE All Share tracker fund. So it is not really F&C fault if it doesn't do very well, they are not choosing where to invest.

If you had opted for the "Shares" account instead then you could have picked a fund, such as their flagship "F&C Investment Trust" as I do. Here is a chart (if this works) showing how that fund (blue line) did compared to the tracker (red line, though there were several variations so might not be quite the same as you have) and the FTSE All Share Index (yellow line) which it tracks over the last year:
https://www.google.co.uk/finance?chdnp=0&chdd=1&chds=1&chdv=0&chvs=maximized&chdeh=0&chfdeh=0&chdet=1435246200000&chddm=261&chls=IntervalBasedLine&cmpto=INDEXFTSE:ASX;MUTF_GB:FC_FTSE_ALLS_9YO2TE&cmptdms=0;1&q=LON:FRCL&ntsp=1&ei=TbeLVam5LouDsgHur4J4

So one option would be to switch to the shares account BUT
1) They have introduced that £25pm +VAT fee. It matters little on a small sum but proportionally more on a small one
2) Maybe investments are not for you if you worry about a drop. There will be regular drops and crashes. If that panics you then a savings CTF/JISA would be a better option.

I am not suggesting what to do, just suggesting you weigh up your options instead of stampeding into something without thinking it through.

Jeepers_Creepers

Hi Reaper.

I appreciate your input.

I did have a look over the whole ~12 years this CTF has been running, and that included some pretty good times for the stockmarket and investments.

Bottom line is, I also have a simple 'young saver' account at the Halifax for my kid and that is currently returning 3% - with no ties, no penalties, no deductions. Just a simple, and far superior, 3% return with access at any time.

I did my research at the time, and the F&C Stakeholder was held up as being the 'best'. For my kid's savings, I'd now rather 'know' what the return is going to be on a yearly basis (currently 4% for the ISA or 3% on savings), so an ISA or savings account is now my preferred option.

It looks to me that these would also have done better over the past decade.

Reaper

Jeepers_Creepers wrote: »

I did my research at the time, and the F&C Stakeholder was held up as being the 'best'.

It was good at the time before they introduced the £30pa fee (£25 + VAT) which killed it for those with small sums, though as I say I prefered the Shares account option that let you pick which fund to invest in and I have stuck with it.

For my kid's savings, I'd now rather 'know' what the return is going to be on a yearly basis (currently 4% for the ISA or 3% on savings), so an ISA or savings account is now my preferred option.

Fair enough if that is what you prefer.

It looks to me that these would also have done better over the past decade.

Absolutely not. If your CTF was a lump sum (and ignoring the annual fee) it would have returned over 100% in the last 12 years even though that included a major stock market crash.

If you had been earning a steady 4% (again assuming it was a lump sum) it would have been around 60%

In both cases actual growth would be lower as you have been drip feeding money in.

So by all means switch to savings if you are happier with that, but not if the reason is you were under the impression the savings option would have given a better return to date. Your original choice has paid off so far.

Jeepers_Creepers

Good points, Reaper - thank you.

I kinda had overlooked what should have been pretty obvious to me - that the CTF had started from almost nothing... :-(

I shall examine it all more closely.

Cheers.