Child Trust Funds?
Discussion
A quick question for the learned money wise people of PHville.
My sister has recently had her first child and she is planning to make regular small payments every month into savings and a Child Trust Fund account for her, with bigger lumps spread between the 2 accounts over the years.
I have read up on the CTF accounts available and all seem roughly the same but are either Share Based or Regular Savings account in style. The Share option seems to be the best way to go especially as the limit is only £1200 per year and I would imagine my sis is more likely to be putting half of that into the CTF pot. The other account will be set up as a regular saver that the little person can have access to when she is old enough to start wanting to spend her own money. I know it isn't a huge investment fund but will be significant to my sister who since becoming an Adult has not saved or considered any kind of investment for the future.
Does the share linked account seem sensible and what have other PHers done for their little people?
My sister has recently had her first child and she is planning to make regular small payments every month into savings and a Child Trust Fund account for her, with bigger lumps spread between the 2 accounts over the years.
I have read up on the CTF accounts available and all seem roughly the same but are either Share Based or Regular Savings account in style. The Share option seems to be the best way to go especially as the limit is only £1200 per year and I would imagine my sis is more likely to be putting half of that into the CTF pot. The other account will be set up as a regular saver that the little person can have access to when she is old enough to start wanting to spend her own money. I know it isn't a huge investment fund but will be significant to my sister who since becoming an Adult has not saved or considered any kind of investment for the future.
Does the share linked account seem sensible and what have other PHers done for their little people?
Chris_w666 said:
A quick question for the learned money wise people of PHville.
My sister has recently had her first child and she is planning to make regular small payments every month into savings and a Child Trust Fund account for her, with bigger lumps spread between the 2 accounts over the years.
I have read up on the CTF accounts available and all seem roughly the same but are either Share Based or Regular Savings account in style. The Share option seems to be the best way to go especially as the limit is only £1200 per year and I would imagine my sis is more likely to be putting half of that into the CTF pot. The other account will be set up as a regular saver that the little person can have access to when she is old enough to start wanting to spend her own money. I know it isn't a huge investment fund but will be significant to my sister who since becoming an Adult has not saved or considered any kind of investment for the future.
Does the share linked account seem sensible and what have other PHers done for their little people?
As with anything share based, your investment can go down as well as up - most people I talk to are suffering the former opposed to the latter!My sister has recently had her first child and she is planning to make regular small payments every month into savings and a Child Trust Fund account for her, with bigger lumps spread between the 2 accounts over the years.
I have read up on the CTF accounts available and all seem roughly the same but are either Share Based or Regular Savings account in style. The Share option seems to be the best way to go especially as the limit is only £1200 per year and I would imagine my sis is more likely to be putting half of that into the CTF pot. The other account will be set up as a regular saver that the little person can have access to when she is old enough to start wanting to spend her own money. I know it isn't a huge investment fund but will be significant to my sister who since becoming an Adult has not saved or considered any kind of investment for the future.
Does the share linked account seem sensible and what have other PHers done for their little people?
Many people are weighing in Mr Brown's vouchers and thinking they are the starting the Uni fund...
Best thing would be to me, as we have done with ours, is put Gordo's money somewhere safe, forget about it and open an individual savings account - which is a safer option...
PS - Congratulations on becoming an Uncle...
We are going to be in the same situation very shortly and have been giving this some consideration.
Its much of a muchness really.
On the shares front, if you work on a historic basis taking out the peaks and troughs the FTSE 16 years ago was around 3,080. It is now worth around 5,000. On a simple calculation £250 then would be worth £450 now.
On the savings front you need need 3.74% per annum interest guranteed to beat it. Some providers are offering up to 5.00% (with bonus) as long as you live in their catchement area (small local building societies)
I am pretty much certain that we will put the £250 into the stakeholder plan, but at the same time open a standard savings account with £250 and putting equal monthly payments into each.
Its much of a muchness really.
On the shares front, if you work on a historic basis taking out the peaks and troughs the FTSE 16 years ago was around 3,080. It is now worth around 5,000. On a simple calculation £250 then would be worth £450 now.
On the savings front you need need 3.74% per annum interest guranteed to beat it. Some providers are offering up to 5.00% (with bonus) as long as you live in their catchement area (small local building societies)
I am pretty much certain that we will put the £250 into the stakeholder plan, but at the same time open a standard savings account with £250 and putting equal monthly payments into each.
NoelWatson said:
Mx_Stu said:
On the shares front, if you work on a historic basis taking out the peaks and troughs the FTSE 16 years ago was around 3,080. It is now worth around 5,000. On a simple calculation £250 then would be worth £450 now.
Way too simple. YOu must not ignore dividends.And during more leaner stock market times your monthly investment buys more shares.
Noel, does your statement mean that it will be worse than the simple explanation or better? (not being picky I genuinely don't understand it).
It is academic now anyway, I told my sis the bits I did understand and she has opted to put the voucher into a stakeholder and will split monthly money 50-50 with any cash gifts that the little one gets going into another savings account. I might just stick to buying toys at least kids like them
It is academic now anyway, I told my sis the bits I did understand and she has opted to put the voucher into a stakeholder and will split monthly money 50-50 with any cash gifts that the little one gets going into another savings account. I might just stick to buying toys at least kids like them
Chris_w666 said:
Noel, does your statement mean that it will be worse than the simple explanation or better? (not being picky I genuinely don't understand it).
It is academic now anyway, I told my sis the bits I did understand and she has opted to put the voucher into a stakeholder and will split monthly money 50-50 with any cash gifts that the little one gets going into another savings account. I might just stick to buying toys at least kids like them
It means that the stock market has done better than the simple example. The yield on the FTSE is very approx 4% p.a., so you would need to include this (which would be reinvested) in your calcs. Along with the FTSE index, there is a FTSE total return index - I can look this up on Monday to get a comparison. It is academic now anyway, I told my sis the bits I did understand and she has opted to put the voucher into a stakeholder and will split monthly money 50-50 with any cash gifts that the little one gets going into another savings account. I might just stick to buying toys at least kids like them
Personally, I have opened a self select shares CTF for the kids and buying blue chip shares every year. My reasoning is....
"And looking at rolling 18-year periods, the study discovered that shares beat cash a stunning 99% of the time."
http://www.fool.co.uk/news/investing/investing-str...
http://www.bankofscotlandprivateclients.co.uk/comm...
Ignore this pointless government scheme and spend the money on taking the kids somewhere nice.
We were given (actually not given, taxed for something we didn't want, would be more accurate) a trust fund for our little ones. We ignored the letters and have taken ZERO notice of the things.
Dead money.
We were given (actually not given, taxed for something we didn't want, would be more accurate) a trust fund for our little ones. We ignored the letters and have taken ZERO notice of the things.
Dead money.
cymtriks said:
Ignore this pointless government scheme and spend the money on taking the kids somewhere nice.
We were given (actually not given, taxed for something we didn't want, would be more accurate) a trust fund for our little ones. We ignored the letters and have taken ZERO notice of the things.
Dead money.
I don't understand?We were given (actually not given, taxed for something we didn't want, would be more accurate) a trust fund for our little ones. We ignored the letters and have taken ZERO notice of the things.
Dead money.
NoelWatson said:
cymtriks said:
Ignore this pointless government scheme and spend the money on taking the kids somewhere nice.
We were given (actually not given, taxed for something we didn't want, would be more accurate) a trust fund for our little ones. We ignored the letters and have taken ZERO notice of the things.
Dead money.
I don't understand?We were given (actually not given, taxed for something we didn't want, would be more accurate) a trust fund for our little ones. We ignored the letters and have taken ZERO notice of the things.
Dead money.
Cheers Noel that makes great deal of sense now 
when and if I have a little person of my own I will go with the options where I get more of a say where the money is invested, simple is better for my sister.
Just had a look and if you don't invest the government pick a stakeholder account for you as a default after 18 months.
when and if I have a little person of my own I will go with the options where I get more of a say where the money is invested, simple is better for my sister. Just had a look and if you don't invest the government pick a stakeholder account for you as a default after 18 months.
russ_a said:
?? - The goverment give you £500 - You can stick it in a savings account or invest it in a trust fund. By ignoring the letters you have just cost your little one £500!!
As I understand it, the money is still invested on the kid's behalf even if the parents do nothing -there is a default option for people who do not respond or do not make their own choice of fund.Lurking Lawyer said:
russ_a said:
?? - The goverment give you £500 - You can stick it in a savings account or invest it in a trust fund. By ignoring the letters you have just cost your little one £500!!
As I understand it, the money is still invested on the kid's behalf even if the parents do nothing -there is a default option for people who do not respond or do not make their own choice of fund.Ignore the letters and your kid still gets the money. If only they hadn't set the scheme up in the first place I'd have an extra 500 quid right now to spend on him.
Aparently I'm supposed to be gratefull for the government putting money I can't have for years into a scheme I never asked for.
By showing enthusiasm for this you are actively encouraging them to take even more in the future. They'll think that the voters like it.
cymtriks said:
Like I said. You don't need to do anything.
Ignore the letters and your kid still gets the money. If only they hadn't set the scheme up in the first place I'd have an extra 500 quid right now to spend on him.
Aparently I'm supposed to be gratefull for the government putting money I can't have for years into a scheme I never asked for.
By showing enthusiasm for this you are actively encouraging them to take even more in the future. They'll think that the voters like it.
???? Blimey, you really don't get it do you?Ignore the letters and your kid still gets the money. If only they hadn't set the scheme up in the first place I'd have an extra 500 quid right now to spend on him.
Aparently I'm supposed to be gratefull for the government putting money I can't have for years into a scheme I never asked for.
By showing enthusiasm for this you are actively encouraging them to take even more in the future. They'll think that the voters like it.
VX Foxy said:
cymtriks said:
Like I said. You don't need to do anything.
Ignore the letters and your kid still gets the money. If only they hadn't set the scheme up in the first place I'd have an extra 500 quid right now to spend on him.
Aparently I'm supposed to be gratefull for the government putting money I can't have for years into a scheme I never asked for.
By showing enthusiasm for this you are actively encouraging them to take even more in the future. They'll think that the voters like it.
???? Blimey, you really don't get it do you?Ignore the letters and your kid still gets the money. If only they hadn't set the scheme up in the first place I'd have an extra 500 quid right now to spend on him.
Aparently I'm supposed to be gratefull for the government putting money I can't have for years into a scheme I never asked for.
By showing enthusiasm for this you are actively encouraging them to take even more in the future. They'll think that the voters like it.
Although I suppose now with QE they can just print it
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