HSBC Children's Trust Fund

bigsize9foot

Hi,

Looking for a bit of advice. My kids have an HSBC Child Trust Account. My sons is 12 years old now- in that time it has seen 21.8% growth which I know is more than I would get in any standard savings account.

However in the last year it dropped by over £700 (it was at 51% growth last year) I understand this is because the markets are low just now and that I should leave things as they are and hopefully it will recover.

There is 5 years left on this trust fund so I have time to wait for it to recover again but my fear is that there may be another "crash" just before it matures and it wipes out a lot again. I am considering waiting until it recovers then withdrawing it to a risk free savings account.

Do you think this would be a reasonable idea and does anyone even know if this is possible?

Thanks
B

xylophone

HSBC Child Trust Account.

Do you mean a Child Trust Fund?

It would be possible to realise the investment within the CTF and transfer to a cash JISA.

Coventry currently offering 3.6%.

Reaper

Nobody can say what will happen in the future but generally withdrawing money after a stock market fall is a bad idea. Crashes are regular occurrences and as long as your investment is diversified more likely to be buying opportunities than selling ones.

Five years is a decent period of time for them to recover and of course there is no need for the children to sell the moment they are able - they will convert automatically into ISAs when they end.

Alexland

Do you have a view on when the child is likely to withdraw the money? This might be later than when they first get access to the money at 18. Or they might want to withdraw immediately to recycle the money into a Lifetime ISA etc.

It would be sensible to implement a derisking strategy as you get into the last 5 years before withdrawal.

Transfering to a Cash Junior ISA next time you are happy with the valuation would be a perfectly valid choice.

Alex

bigsize9foot

Thanks everyone. I'm not sure when they will choose to withdraw it. It's aim is to be a lump sum for uni/house deposit/car- those big expenses when you leave school.

I think I will keep an eye on it and when I am happy with its recovery I will transfer it to an ISA/JISA which will be much safer. Wish I'd done that last year!!! But need to remember even with the loss this year it has still made much more than it would have in a standard savings account. In the meantime I will save into a regular saver for them.

Thanks for the reassurance.

B

eskbanker

bigsize9foot wrote: »

But need to remember even with the loss this year it has still made much more than it would have in a standard savings account.

bigsize9foot wrote: »

My kids have an HSBC Child Trust Account. My sons is 12 years old now- in that time it has seen 21.8% growth which I know is more than I would get in any standard savings account.

Not sure I'd agree with that - if you're saying that it's grown by an aggregate of 21.8% over a 12 year period, that's only an annual rate of 1.66%, which wouldn't have been hard to beat....

Alexland

eskbanker wrote: »

Not sure I'd agree with that - if you're saying that it's grown by an aggregate of 21.8% over a 12 year period, that's only an annual rate of 1.66%, which wouldn't have been hard to beat....

Yes I thought that too but didn't comment as the OP seemed happy with their return and you can't change the past.

Alex

eskbanker

Alexland wrote: »

Yes I thought that too but didn't comment as the OP seemed happy with their return and you can't change the past.

Alex

Indeed, and I didn't pick up on it first time round, but OP then reiterated the importance and significance of its past performance, so it seemed worth challenging this, in case they have similar misapprehensions about what can be expected in the future....

Alexland

With that investment performance it seemed reasonable to move entirely into cash for the final 5 years.

bigsize9foot

Oops. Maybe I have my figures wrong. I calculated it the best way I knew how. If I’ve paid in £4531 over 12 years and it’s now worth £5518 does this mean it would’ve been better in a savings account all along!! Aghh!