Child Savings Accounts

Crudgfc

Dear Friends at Martin Lewis and others

My wife and I have set up savings accounts for our 3 grandchildren aged from 13 to 8. The accounts were set up with Foresters and up until the slump we were very happy with their performance. For the last 2 years however they have been steadily losing money despite us continuing to pay into the savings accounts. For one of them we paid in nearly £300 and the value of the account only went up £125.

We would like to know what your advice would be for other grandparents who are hoping to save nest eggs for our grandchildren which will give them a boost when they become 18.

Details of the accounts are as follows:-

Grandchild 1 – aged 13 – Child Trust Fund (made up of Aberdeen UK Share Trader and Foresters Shareholder (Schroders)) paying in £24.77 per month - value at 29/6/22 £4,517

Grandchild 2 – aged 10 – Junior ISA - (made up of Aberdeen UK Share Trader) paying in £28.59 - value at 29/6/22 £2,900

Grandchild 3 – aged   8 – Junior ISA - (made up of Aberdeen UK Share Trader and Foresters Shareholder) paying in £26.20 - value at 29/6/22 £1,800

Given that each of the funds is losing money, compared to what we are paying in, we would welcome some advice on what is the best course of action for us to take which will give our grandchildren the best return.

We are certain there are many other grandparent who are experiencing the same issue and would welcome Martin’s  advice on what we should do. If it would help, or if it is necessary, I would be happy to appear on one of Martin’s shows (I live in Medway Kent), speak to someone or see him face to face.

I await anyone's response with interest.

My best regards.

Alan C

eskbanker

Although you refer to 'savings accounts', these are obviously investments, which can and do fluctuate in value, which will have been highlighted in product literature, etc.

All investments have been through a negative period since late last year, but nothing out of the ordinary (similar, but shorter-lasting, drops in 2018 and 2020, for example), and as any investing should only be considered for the long term, short term fluctuations in value would be a poor reason to take any action, so the most sensible approach would be to sit tight....

Edit: that's not to say that the specific investments or platforms you chose are the best ones, so it may also be worth considering alternatives, but not selling up if that's what you were thinking of.

Albermarle

First point is better not to sign posts with your name as it is better to stay anonymous when discussing your family finances.

My wife and I have set up savings accounts for our 3 grandchildren aged from 13 to 8.

These are clearly not savings accounts. A saving account will never go down and small amounts of interest will be added.
These are investment accounts and 'Investments can go down as well as up'

Most investments have been up and down over the last couple of years, but typically they should be worth approx what they worth this time last year ( subtracting contributions made during the 12 months)

Overall though these friendly society type accounts are not the best, and are relatively expensive, so probably worthwhile transferring them elsewhere. Although wherever you transfer them they will fluctuate in value over different periods, but hopefully will grow in the long run.

xylophone

You mention that you are grandparents.

These accounts are CTF/JISA so presumably (unless you are the legal guardians) it was one of the parents who opened these accounts and has control of them? 

There is no problem with relatives/friends contributing to the accounts.

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

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

As others have said,  these are investment accounts and the value of investments fluctuates.

It would be possible to transfer these accounts to another provider by  requesting the new provider to arrange a transfer.

Once that was done, it would be up to you to choose the investments within the account - a global multi asset fund is often suggested.

However, the values would still fluctuate.

Examples here

https://monevator.com/passive-fund-of-funds-the-rivals/

Fidelity has received favourable mentioned as a JISA provider.

They accept transfers in of JISAs and according to this, are working on being able to facilitate a transfer in from a CTF later this year.

https://help.fidelity.co.uk/site/investment-tools-and-products/child-trust-fund-into-JISA#:~:text=It is not currently possible,about the Fidelity Junior ISA.

Otherwise, there are other providers who  currently accept  CTF and JISA transfers in.

Examples
https://www.bestinvest.co.uk/isa-and-junior-isa/transfer-junior-isas-and-child-trust-funds/?mkwid=s&crid=612056322464&utm_campaign=14884572638&utm_medium=cpc&utm_source=google&mp_kw=jisa&mp_mt=p&pdv=c&network=g&gclsrc=aw.ds&gclid=EAIaIQobChMIwcWUg_2l-QIVjdnVCh0OZQdJEAAYASAAEgJWA_D_BwE

https://www.youinvest.co.uk/investing-for-children/child-trust-fund-transfer-junior-isas#:~:text=To transfer a CTF to,to Junior ISA transfer form.


It would also be possible to transfer to cash JISAs but the interest payable is a long way below the current rate of inflation.

Example

https://www.coventrybuildingsociety.co.uk/member/product/savings/children/junior-cash-isa-2.html