Child Trust Fund

[Rosendula]

The CTF didn't exist when my eldest two were born, but when I had little Katie back in April 2006 I took the government up on it's offer of £250 to put away for her when she's older. Well, I don't know about you but I found it all rather baffling, but I did my best. The offers of free gifts galore came at me thick and fast with even more offers if I put my own money in it too. Well, having two teenagers at the time, I decided to continue putting money away for them as and when I could, the idea being that when they are working I will stop putting my money away for them, and start saving for Katie instead. Well, I am so-o-o pleased I did that. Their money is earning interest. Only a tiny amount, but it's earning. Whereas the money in the CTF is disappearing! What started off as £250 is now worth £146.41. I don't think I would have put my money in the CTF anyway, as I prefer to use banks or building societies, but when I think of all the people who have put their money into them.

[Urban Ayisha]

i think you must have put the money in a CTF investment account rather than just a savings account, so whatever they have chosen to invest your money in has obviously lost value in the current climate.

[Penny Lane]

Same has happened to my son's CTF, had a statement through yesterday. He's also 'lost' over a £100 in investments!

We'll just leave it to do whatever it wants and hopefully in 17 years there'll still be a couple of quid in it!

[Rosendula]

i think you must have put the money in a CTF investment account rather than just a savings account, so whatever they have chosen to invest your money in has obviously lost value in the current climate.

I know there were the two different types and I really took pains to get the type that wasn't risky. I guess I must have made a mistake

Penny Lane, I'm with you. It's not money we've put in that's being wasted, so it doesn't hurt, I was just very taken aback when I got the statement. When my other daughter leaves school next year, that's when I'll start putting my own money away for Katie, but it will be in a 'proper' savings account, not some crazy government scheme.

[Tay]

a 'proper' savings account, not some crazy government scheme.

A crazy government scheme seems a bit harsh. The savings account option for the CTF is the safest; no money lost, just interest gained. The only problem with that is that interest rates are pitiful at the moment. But you won't lose money, so you could always change to this type of account.

The riskier ones are the shares account and the stakeholder account, with the former being the most risky. I went for the latter as over the next 17.5 years, the recession will have ended, interest rates improved and the account should have increased in value by a reasonable amount. I will keep my eye on it and nearer the time, will probably change from the stakeholder type to savings to ensure that the money gained in interest is not lost, should another recession occur.

However, I will be opening another account for my son as I think it's wisest to save separately; the thought of him potentially spending all that I've saved when he turns 18 is a frightening prospect. With a non CTF account, I can ensure that doesn't happen!

[Rosendula]

the thought of him potentially spending all that I've saved when he turns 18 is a frightening prospect. With a non CTF account, I can ensure that doesn't happen!

Hmm.. that's what I'm going through with my eldest daughter now. As soon as she hits 16 next December, she can withdraw all of the savings I've struggled to put away for her. Despite my greatest efforts (and achievements with my son who still has all of his savings, now in an ISA, a year after he got them), she is totally irresponsible with her money. My intention is to take it out and put it in my own account until she proves to me she can handle it, but as she's currently getting more interest than me I'm waiting until the last minute.

[Thomzo]

Rosendula it does sound as if you ended up with a stocks and shares CTF. You say you took pains to chose one that wasn't risky ( a cash CTF). Go back to where you got it from and complain. If they didn't explain that you were investing in the stock market then you have cause for complaint.

One the other side, however, if the stock market does pick up then it is possible that the investment will go up more than a cash investment account. You have a few years yet so there is plenty of time for the money to go back up.

Zoe

[MrsD'ville mkII]

A very useful post, thank you, as I have the blurb sitting on my desk and haven't done anything with it yet...

[Thomzo]

MRs DV. You do need to make a decision fairly soon. If you don't, then the government will chose one for you and it might not be what you want. Here is a link to the Government's list of providers http://www.childtrustfund.gov.uk/templa ... _1243.aspx

I am not allowed to advise you which to take out but the basics are that a shares account invests in stock market related investments (shares, bonds etc) which may be just UK based investments or could include overseas investments. The value of these can go down as they are related to the stock market. On the other hand they could go up a lot more than a cash investment. A stakeholder account also invests in shares but there are some safeguards built in to reduce the risk. The value of the investment can still go down.

A cash (savings) account is just like a regular building society account where you get interest on your money. It is much safer but doesn't have the potential for the larger returns possible from a shares account.

Hope this helps.

Zoe

[Tay]

Has anyone here signed up to http://www.kidstart.co.uk/? It is a scheme where you can earn points/money for you child (either the CTF or a bank/building society account) when you shop online with various well-known retailers (Boots, Argos, Field and Trek to name a few). I can't see any drawbacks, but I'm a naturally cautious person so thought I'd see if anyone else had experience of it before signing up to it.

[Annpan]

There are several online reward schemes around that give you points or cash back when you use the site (epoints and nectar both do it) So it is probably just another one of those schemes but puts the money in the CTF instead.... seems good if you remember to use it (which we never do )

[missy]

my son's CTF has gone from being worth nearly £400 last year to being worth £140ish this year.

i've just recieved the £250 cheque to open my daughters account, but i'm not sure who to go with.

my son's one is with hsbc, at the time of opening it i thought it'd be the safest option as we bank with them.

anyway advice would be apreciated

[Annpan]

I doubt anyone here can give advise really

I would say, don't worry what it stands at just now, it is just a nice little extra for when LO turns 18.... could buy a car.... could by some furniture... could buy a holiday... but it isn't their financial future you are talking about with a CTF, just a little boost.

In the 'current climate' I would be more inclined to go down the shares road, as I keep thinking that the shares aren't likely to sink much lower so more potential profit to be made... especially in comparison to interest rates just now - but it is basically a gamble which ever you do.

[Thomzo]

I am absolutely NOT advising here but the stakeholder option automatically switches from the shares option (riskier but with potentially higher returns) to the cash option (safer) as the child gets older.

Think about how you like to communicate with the provider. Do you want somewhere with a branch close by so that you can talk to someone face to face? Or do you prefer to deal over the phone or internet?

If you go for a shares-based account, note how many units are purchased with the initial investment. Then you can look up the price per unit on the company's website and work out for yourself how much the investment is worth and whether it has gone up or down. As the child gets older they can do this for themselves.

A cash account will possibly be quicker to cash in when the child wants to do so. Share based accounts often require you to send a letter and wait for the money to be sent out. You may see this as a good thing. If you think the child will want the money to buy a car then the cash option may be better, if you are worried that they might cash it in at the earliest opportunity and fritter the money away, then the latter might be better option. It might be difficult to tell when the child is only a few weeks old but then, you do know who's genes they have!

Zoe