CTF leave or transfer to JISA

chalkybar

My son has 2 years left until his stakeholder ctf matures, but I was horrified recently how last years downturn reduced his balance which has about £3k left. Should I leave it there in the hope that the value improves, or should I cut the losses and transfer to a JISA. Any help/advice welcomed. Thanks

bowlhead99

chalkybar wrote: »

My son has 2 years left until his stakeholder ctf matures, but I was horrified recently how last years downturn reduced his balance which has about £3k left.

But presumably you weren't "horrified" in the previous years where the upturns increased his balance significantly?

If you have money in investments they will hopefully go up in the long term but in the shorter term (any given five to ten year period), anything could happen, which includes extended periods of loss. Over the next two years the balance could potentially reduce by perhaps two or three times the amount it reduced from its peak last year. That would be true whether you left it in a stakeholder or moved it to an S&S JISA with the same level of risk. But in the positive side it could also recover what you saw it lose, and gain more on top.

If your son is likely to want to spend the money in two years time it might make sense to move it to a cash JISA product and then you know what you've got, with nothing left to chance (other than the extent to which the interest rate might end up being lower than inflation over that couple of years).

Whereas he is likely to want to keep some of it invested for longer -or you don't mind taking investment risk in the hope of bigger gains than bank interest would offer - there is logic in either keeping it where it is or moving it to a modern S&S JISA product. The S&S JISAs can have more investment choices and lower charges than old stakeholder CTFs - but over a short time period they are not necessarily going to be better because the charges don't affect the result by as much as how the underlying investments perform.
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cloud_dog

chalkybar wrote: »

My son has 2 years left until his stakeholder ctf matures, but I was horrified recently how last years downturn reduced his balance which has about £3k left. Should I leave it there in the hope that the value improves, or should I cut the losses and transfer to a JISA. Any help/advice welcomed. Thanks

We don't know.

What other sources of funds does/will your son have? What do you think his plans are likely to be, i.e. is he likely to want to get at the cash and buy a car (etc, etc), or might this money be rolled over for the longer-term, i.e. buying a house?

I often think that today's children with their CTF/JISAs "maturing" at age 18 are, to a degree, very similar to older people approaching retirement. The old school way of thinking to ensure the majority of your assets (money) are in very low volatile holdings (cash) as you approach that deadline is probably out of date. Whilst having cash at a specific age is nice and in most cases very useful the need to continue to obtain higher returns via the stock market remain for both.

My child is 15 soon, and I had envisaged (originally) moving the investments in to low risk or cash from this point onwards but I am now of a mind to leave the JISA invested as we have other cash account(s) for them (some in our name). I envisage speaking with them about retaining investments, possibly reinvesting some / all in to a LISA etc, but it will depend on their thoughts and what they are looking to do.

chalkybar

I Wouldn’t call the previous rises particularly significant , just that we’re topping up monthly and last year we didn’t breakeven on what we’d added that year. I don’t think it’s a long term outlook for house buying etc but for getting mobile maybe for personal use whilst at uni perhaps

xylophone

Coventry offer 3.6% in a cash JISA.

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html