Child trust fund dropped

Cat14_2

Can someone please advise - my CTF dropped nearly £1000 in a week, should I move the money into a junior cash isa or leave it in the CTF?

xylophone

How old is the child?

Malthusian

When do you plan to spend the money?

You won't be able to give instructions on the account until you are 18 (which cannot be earlier than this September) as CTFs started in September 2002), but if you prefer to spend the money in the short term and swallow the hit rather than wait for the value to recover, you could always ask the parent or guardian to switch it into cash.

Cat14_2

Xylophone - child is 10

i want to keep the money until she is 18

AnotherJoe

Were you not aware that the investment would drop at some point over the lifetime of the CTF? If it was me, and I have  grandkids with JISAs, I'd advise to leave alone.  Panicking and selling is what loses money  

xylophone

i want to keep the money until she is 18

There is no option about that- the money will not be released  (and then only to the child) until that age.

Market based investments do go up and down - peaks and troughs are to be expected.

At the moment there is a period of very high volatility.

Are you content that the CTF you currently have is the best for your circumstances - a JISA might be a better option from the point of view of choice and charges.

https://moneytothemasses.com/quick-savings/parents/best-junior-stocks-and-shares-isa

https://www.gov.uk/child-trust-funds

https://www.gov.uk/junior-individual-savings-accounts

dunstonh

Cat14_2 said:

Xylophone - child is 10

i want to keep the money until she is 18

So, why are you worrying about a short term loss that is not as big as either the credit crunch or dot.com period (highlighting those as an indication that you knew what would happen at some point when you invested.  So, now its happened, what has changed?)

Cat14_2

Xylophone - would you just leave the funds in the trust fund? It has never dropped like that before that’s why I worried.

redpete

Cat14_2 said:

Xylophone - would you just leave the funds in the trust fund? It has never dropped like that before that’s why I worried.

You move out of the funds now and you might be moving out at the lowest level, or it could drop considerably more.  Either way you have another 8 years for it to recover.
With stock markets being at record high levels for some time something was very likely to cause them to drop / crash.  It happens to be a health issue that is having the largest affect on the global economy that I have ever seen., You seem surprised by this? 

mcooke999

Don't sell. As others have said you've got 8 years before the child can access it so plenty of time to recover. Selling now would potentially damage your child's future for no reason other than fear / panic! Don't do it, switch it off and look again in 5 years time.

JF2019

Hi, I feel your pain. My DD turns 18 in 20 months. Her CTF has dropped around 3k in 2 weeks eeek. I am sort of happy to sit tight and hope that 20 months is enough time for a recovery. 
Recent new guidelines state 'at maturity, where no instructions have been received from the account holder on what they want to do with the investments in the child trust fund, the money will be held in a ‘protected account’ pending instruction.
Funds in the ‘protected account’ will retain their tax advantaged status, and the terms and conditions which applied before maturity'. I asked the CTF provider if this meant that my DD could hang fire at maturity if not happy with the amount until she was and they seemed to think this would be ok but that no further contributions could be made. 
Interestingly, her October 2008 statement, at the time of the financial crash, was £279.00 down compared to total payments made since inception and in October 2009 was £27.07 down compared to total payments made since inception. I was happy to sit tight as lots of years left and by October 2015, she was £1,773.95 up and this continued to grow. Her latest statement in November 2019 was £5,081.45 up compared to total payments made since inception. So now we are about 2k up. They adopt a lifestyling approach from 16 but not sure how / if that has helped her. I think I need to stop logging in everyday lol.