Child Trust Fund vs Junior ISA

lhead123

Hi all.

My nearly 10 year old has a child trust fund account. It started with the government's cheque for £250, and now, about 9 years after opening it's up to £394. I'm trying to work out how much interest it's earning (on average) in that account.

The CTF is a stocks and shares one, so I know there's no guarantees, however I'd like to know what the interest rate has been over the time it's been opened so I can make a decision.

She also has a regular savings account which we put £10 a month into, but the interest on that is 1% or something very low, so we want to move that money.

Question is - would it be better to transfer the CTF into a Junior ISA at 3% and then add in the savings account money?
Or would it make more interest staying in the CTF (assuming it continues to do as well as it has been) and put all the money into that instead?

Thanks

cloud_dog

Firstly, it is invested in a fund (stocks and shares) so it doesn't gain interest.

It has gained 57% over those 9 years. Whether that is good or bad we cannot tell as we don't know what it is invested in.

What you should do with it is up to you. A JISA is the more modern product so there will be more options available to you in a JISA as opposed to a CTF. The reference to adding more money when in a JISA is a bit of a red herring, you could add more to the CTF if you wanted to, couldn't you?

If you are interested in moving it to a JISA and prefer a savings account version earning interest, the Coventry currently do the best at 3.6% I believe.

sevenhills

cloud_dog wrote: »

It has gained 57% over those 9 years. Whether that is good or bad we cannot tell as we don't know what it is invested in.

That percentage increase is much better than the Junior ISA at 3%

lhead123

cloud_dog wrote: »

The reference to adding more money when in a JISA is a bit of a red herring, you could add more to the CTF if you wanted to, couldn't you?

I meant I could either put all of her money into the CTF or all of her money into the JISA...right now it's split between CTF and a savings account. We will continue to put £10 a month into her account, but we just need to decide which option to go with.

xylophone

You might consider transferring the CTF to the Coventry JISA - you could then add whatever is in the savings account and continue to add your £10 a month to that.

Alexland

sevenhills wrote: »

That percentage increase is much better than the Junior ISA at 3%

Yes its about 5pc pa compounding which is about the return you would have achieved on low risk VLS20 (or maybe VLS40 after paying platform fees). So provided it was a very cautious asset allocation that's alright. In reality it was probably a more balanced risk with higher fees depressing the return.

However given current market valuations I dont see any respected market analysts suggesting this decade will produce the same level of return as the previous decade. On that basis the Coventry 3.6% cash Junior ISA is very attractive. In addition the OP will have more certainty on the account valuation if the money is to be used at age 18.

Alex