Should I transfer CTF to an ISA?

MeenaM

I had been contributing £25 per month into my daughter's CTF which is a stocks and shares one, since 2010 when she was born. It is with Forrester and is today worth £4,110. So I think not a bad return?
Charge of 1.5 %

My question is should I transfer this into a junior stocks and shares ISA? the only advantage I can see is that it will have a cheaper charge? I looked at Vanguard which has good reviews but wont accept CFT , then I read that if you transfer with your current provider into a junior ISA then transfer it to Vanguard they would accept? I checked Forrester and they dont charge to transfer to an ISA but not sure if they would then charge if I transferred the ISA to another provider.

I will be in a position shortly to pay £300 per month into this so I really want to be focused on getting the best return for money as I hope she can use it for university fees when she is 18 , she is 10 in February so will be just over 8 years left to contribute.

thank you everyone for any advice and replies

Alexland

Rather than switch to a new Forrester product (which tend to be opaque with potential early exit adjustments) it might be better to switch into a Cash Junior ISA with a reputable high street bank (ideally one you already have a relationship with, eg Santander accept CTFs) before then onward transfering to Vanguard Investor.

Remember once at Vanguard you need to decide on suitable fund(s). Our children are invested in the target date VTR series which derisk as the withdrawal date approaches.

Also consider if you would prefer to make your £300 pm contributions into your own ISA to retain control on how it is spent.

Alex.

MeenaM

Alexland wrote: »

Rather than switch to a new Forrester product (which tend to be opaque with potential early exit adjustments) it might be better to switch into a Cash Junior ISA with a reputable high street bank (ideally one you already have a relationship with, eg Santander accept CTFs) before then onward transfering to Vanguard Investor.

Remember once at Vanguard you need to decide on suitable fund(s). Our children are invested in the target date VTR series which derisk as the withdrawal date approaches.

Also consider if you would prefer to make your £300 pm contributions into your own ISA to retain control on how it is spent.

Alex.

Thanks Alex , do you think its a good idea to transfer then rather than stay with Forester ? aside from the cheaper fee with Vanguard do you think its better investments?

MeenaM

another option for me may be to transfer to the junior stocks and shares isa that Forester have and also open a cash junior isa some where else, looking at fees for Forester it is 1.5 % but that is it no extra fees whereas looking at other providers they may say only 0.45 % but then say there are additional fees etc

I assume that the junior stocks and shares isa will have more investment options than a CTF?

Alexland

Yes 1.5% is a high fee and for comparison a VTR fund on Vanguard Investor would only cost 0.24% for the fund and 0.15% for the platform so 0.39%. Both funds would also have some very small internal transaction costs.

Cash Junior ISA rates are as high as 3.6% with no fees other than the hassle and cost of stamps to move the account around to maintain the best rate over the next 8 years.

So to break even on a Cash account the Forester assets would need to generate a return of over 5%. Or the Vanguard asses would need to generate a return of 4%.

Looking at historic fundamentals most people would agree that assets are currently 'not cheap' which will affect their level of return over the medium term. For example Vanguard's forecast is that you would need to maintain an 80/20 equities to bond ratio to get that 4% return.

The problem is that most people would also agree with the need to derisk as you approach withdrawal so you have more certainty of the final valuation and to reduce the impact of a big market drop before withdrawal. This derisking damages return to the point where although S&S (in a CTF or JISA) might do better over 18 years (boosted by running a higher risk in the early years), cash might do better over the final 8 years (as the asset allocation would be less adventurous).

Our children are much younger so we are sticking with S&S for now but would likely switch down to cash before withdrawal especially if child interest rates remain strong relative to likely balanced risk S&S returns.

Alex

MeenaM

Alexland wrote: »

Yes 1.5% is a high fee and for comparison a VTR fund on Vanguard Investor would only cost 0.24% for the fund and 0.15% for the platform so 0.39%. Both funds would also have some very small internal transaction costs.

Cash Junior ISA rates are as high as 3.6% with no fees other than the hassle and cost of stamps to move the account around to maintain the best rate over the next 8 years.

So to break even on a Cash account the Forester assets would need to generate a return of over 5%. Or the Vanguard asses would need to generate a return of 4%.

Looking at historic fundamentals most people would agree that assets are currently 'not cheap' which will affect their level of return over the medium term. For example Vanguard's forecast is that you would need to maintain an 80/20 equities to bond ratio to get that 4% return.

The problem is that most people would also agree with the need to derisk as you approach withdrawal so you have more certainty of the final valuation and to reduce the impact of a big market drop before withdrawal. This derisking damages return to the point where although S&S (in a CTF or JISA) might do better over 18 years (boosted by running a higher risk in the early years), cash might do better over the final 8 years (as the asset allocation would be less adventurous).

Our children are much younger so we are sticking with S&S for now but would likely switch down to cash before withdrawal especially if child interest rates remain strong relative to likely balanced risk S&S returns.

Alex

thank you , I am now leaning towards transferring to a junior cash isa for this final 8 years . I am happy for daughter to have control when she is 18

rumpetroll

I am going through the process at the moment of transferring the CTFs for my 2 out to a junior ISA. My target is to also get the money in to a Vanguard account so my intermediate step is to put it in to NS&I which are offering 3.25% AER.

I had opened the NS&I account and could view it online, then initiated the transfer and since then the accounts have disappeared from NS&I, so I'll be on the phone to them today to find out what's going on.

While I am happy for my kids to have control of the money when they are 18, I am going to try to educate them on compounding interest and get them to keep investing in these rather than getting a little payout when they are 18.

MeenaM

rumpetroll wrote: »

I am going through the process at the moment of transferring the CTFs for my 2 out to a junior ISA. My target is to also get the money in to a Vanguard account so my intermediate step is to put it in to NS&I which are offering 3.25% AER.

I had opened the NS&I account and could view it online, then initiated the transfer and since then the accounts have disappeared from NS&I, so I'll be on the phone to them today to find out what's going on.

While I am happy for my kids to have control of the money when they are 18, I am going to try to educate them on compounding interest and get them to keep investing in these rather than getting a little payout when they are 18.

Hi
I have also gone for the NS&I one, just waiting for it all to go through now,