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Child Trust Fund
in Child support
3 replies 389 views
Hi, I’ve just received a balance in my daughters Trust fund as she is nearly 18. I am shocked at how low this is around 1/10 of what other friend’s children have received! I deposited this 18 yrs ago with Santander but this was moved on to a company called one family. Had anyone else experienced this or got any advice?
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As well as differences in interest rates between different Cash CTFs, you need to know if your friends invested in stocks & shares accounts rather than cash accounts. The returns would vary depending on the investments chosen and over what period.
I transferred my child's cash fund to a Cash JISA some years ago and separately opened a Stocks and Shares JISA which has performed hugely better but is of course vulnerable to market downturn because of the risk taken with the equity funds chosen. My 16 y.o. son plans to roll the S&S JISA over to an adult S&S ISA when he is 18 so we have not reduced his equity exposure. He is happy to consider a long-term investment horizon for that whereas the cash JISA is for his needs at university, running a car, or otherwise starting off his adult life.
If your daughter is able to do without the cash in the short term and hopes to save towards a flat/house deposit, perhaps she could look at opening a LISA with the money you have saved her? HMRC adds 25% to deposits into a LISA, with the maximum deposit she can make being £4,000 p.a. (so topped up by an extra £1,000, giving £5,000) which would be a very quick improvement on the interest earned on the CTF!
This is just a suggested path for research though - and your daughter could look at other threads on LISAs and read up on them elsewhere on MSE, etc, before deciding if the terms and conditions of that kind of account are suitable for her. The availability or characteristics of new LISAs could change in the next Budget of course, so look out for that in March.
In fact, after charges, over the last five years, the fund has grown by more than 5% per year - I'm do glad I didn't choose an interest account with Nationwide as I would have struggled to get half of that. This is a very long-term account and in my view, the only place to put this money is in a stocks and shares account.
I have looked into transferring into a Junior ISA, but to be honest, I don't see the value in it. These big fund managers tend to have horribly complex charging structures and thousands of funds...also they seem to have quite high minimum premiums. One thing I didn't like was that, although it was free to transfer in (of course), they would charge me to transfer out to another Junior ISA - effectively tying me in!! This was Hargreaves Lansdowne so may not be true of all fund supermarkets.
Family also does a Junior ISA but can't really tell the difference between their CTF and Junior ISA so no point transferring in my opinion.
I like the flexibility of the Family product and their online account management is a friendly and useful tool to show my eldest child how his investment is growing, I can also view the current value and statements, change my direct debits and pay by debit card online too.
Fortunately I haven't needed to call them much, but when I have, their guys on the phones appear to be very helpful and efficient.