Best child trust fund(3 Posts)
hi there mums (and dads)
I am looking To invest the government voucher and wanted advice on the best current places to invest, with the best rates, and the best type? It's a minefield of stakeholder, shares or cash and rates! X
It depends what you are after.
Chances are you have one of the newer, smaller vouchers - £100 or £50 depending on your household income.
If you are only going to invest the voucher then you may as well take as much risk with it as possible, as in 18 years' time inflation will have pretty much put paid to the purchasing power of a small amount of cash - it probably wouldn't even get your LO a round of drinks on their 18th birthday.
I believe stakeholders have to accept just the voucher, though I could be wrong on that. Their charges are a maximum 1.5% a year, though in practice 1.5% is the minimum, as why would they charge less? In simple terms, 1.5% a year over 18 years on a £100 investment would see costs of £27, though in practice the actual cost will vary as the value of your investment goes down or (hopefully) up with the stockmarket. Most stakeholders invest in funds that track the UK stockmarket. From age 13 they are supposed to begin transferring funds into lower-risk investments so that you do not risk a big dip in value if the market tanks as the CTF nears maturity. Of course, since the oldest of the CTF cohort are not yet 9, we don't yet know how this will work in practice.
You might have trouble getting a shares account if you're only going to invest the voucher, although the one I've looked at, F&C's Shares CTF, says it has a minimum lump sum investment of £100, but there is an option on the application form for 'voucher only'. Their stakeholder account definitely accepts the voucher only.
Of course, if you're planning to top it up yourself then it's a different story, but I'd still say with an 18-year investment horizon that it's worth the risk of thinking about the stockmarket. There's a study showing that over every 18-year period since 1899, shares have a 99% chance of doing better than cash.
Some CTF providers stopped accepting new investments after the reduction in the value of vouchers, because it costs them more than the value of the vouchers to run the accounts if they are not topped up. See here for a list of providers that still do.
i haven't got the figures off the top of my head but i invested in the childrens mutal (its shares) basically as it was the easiest to do at the time and got my annual statements a coupld of months ago and was quite suprised at the good return in the first year (yes i know it can go down as well as up in the future). I got the £250 voucher and was only intending to invest that but am seriously thinking of saving more in this accounts now
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