To not know whether to carry on saving in child ISA

[Dishwashersaurous]

I am hoping for some advice.

I have a child ISA which I save money in every month for my child to cover university costs etc. This is the most basic investment isa. I know that the stock market has taken a beating with covid having just had the annual statement i was a bit shocked that the account is worth less than amount i saved in the last year. Basically was worth 3K A year ago I invested £1k, now worth £2.5K. I Knew that it wasn't going to go up by much but I didn't think that a whole year savings would be effectively worthless.

I don't know whether to carry on with the account and hope it recovers, or whether to switch to savings in a savings account. Where I know the value will be eroded by inflation but at least there will be something.

So AIBU to be really confused and worried about what to do with my child savings

How old is your child? If you have you have a while before they turn 18, there is time for the market to recover and grow and I would leave it in there. The last year has been very bumpy because of covid.

If your child is young keep it in there. Stocks and shares give the best returns when you leave them long term and don’t mess about with them. Now (at the bottom of a dip) would be the absolute worst time to take your investment out. You won’t find a decent interest rate for cash in a bank account.

Personally I'd switch to premium bonds until the market starts picking up again

Is it a shares isa? I would just carry in as you are. Shares may soar this year once pandemic ebbs and you don’t want to miss out on upswing.
I’ve been saving into share is A’s for my kids for nearly 18 years and have seen lots of downs 2008 was the worse but 2019 had drops too. I stuck it out though and they recovered. One significantly better than the other which leaves me with a different dilemma!

I know the advice is to leave it. Over time it should perform better than many other types of savings and investments. I couldn't stand to watch it go down though. I have so little spare money I couldn't face watching it depreciate. So I have left my children's isa alone and started paying into Premium Bonds as they don't go down and you might win something. I have left the amount I already had in the isa to hopefully recover over time.

I thought all the children isas/child trust funds were shares

You can get cash ISAs but the current highest rate is 2.95% and could go down (or up).

We just have cash isa for each child I'm too risk averse lol. Wld hate to see my money going down and u just don't know what the market will be like when the kids want to use the money.

I have a cash ISA with Coventry but can’t get the money out, I thought you could only transfer money to another provider?

You can't take money out of the ISA and put it into a different type of savings account. That is against against rules of the JISA, it's not like an adult ISA which you can withdraw at any time. You could switch it from a shares ISA to a cash ISA, but then you will never recover the loss and it is unwise to do that at the bottom of a very volatile market when the global economy has been fucked by covid but is likely to be starting to recover over the next year. I'd strongly advise leaving it in a shares ISA - over a period of many years it's likely to do much better than cash. If your child is young, it doesn't matter what has happened to the shares in the last year, it matters what happens to them over the next 10 (or whatever) years.

@Dishwashersaurous

I thought all the children isas/child trust funds were shares

No, you get cash ISAs too. I recently switched both my dc's child trust funds into Junior ISAs with Tesco after getting the most recent statements

What have you been investing in? My stocks and shares ISA has gone up 30% in the last year.

I have a lot in N America and emerging markets and only a relatively small amount in UK stocks

It sounds like you put the £1000 in as a lump sum just before the covid dip, so around February 2020? To minimise the impact of fluctuations like that you can look at monthly payments of smaller amounts. That way you even out what point you are buying at. Stocks and shares investments assume gradual continuing growth, so over time by averaging out you should do better. Investing a lump sum is more risky as you might be at the top of a wee peak. My non professional advice would be to leave the money in the stocks and shares as the 'damage' is done now. Change to paying smaller amounts more regularly, and look at the performance of the fund against others in case for some reason yours is not doing as well as it could be. Also check fees. If you feel more comfortable split saving between cash and stocks& shares. Cash rates are pretty bad at the moment, and you do stand a chance of depreciation if inflation is high and interest low, so don't assume it's a better return.

Just keep it there. Shares go up and down. It’s a long term things.

I swapped mine to Junior ISAs as my dcs are I their teens so not much opportunity for recovery (dd is 17, ds 14). Felt I was throwing good money after bad if I left them in the CTF

How old is your child?

I save £100 a month and get annual statements at the children's birthday. Eldest child is 11, youngest 4.

So basically do I keep adding a£100 a month to the account?

I started using Nutmeg about 6 months ago and have found it really good, both for mine and the children's savings. You can toggle your risk level, might be worth a look.

Its a standard child isa, one of the big companies.

I would definitely keep putting money in. You'll be buying shares at the bottom of the market, obviously there are no guarantees but odds are that the market will recover and you will have bought some shares very cheaply.

Keep going. Stock and shares took a beating this year but it will recover and Likely do better than other options.