Did anyone else do NOTHING with the £250 Child Trust Fund

[WarblingEttie]

I just left it where it was and need to find out where it is as DS turns 18 on December 🤔

What did everyone else do?

In our case, the value immediately nose dived and took about 8 years to recover. Why would I add more to something that wasn't working? And by then you couldn't move it to anything but a Junior ISA.

@containsnuts I would have invested for my dcs anyway in whatever tax efficient shelter was available to them. 18 years ago, the CTF was then the tax shelter for children. The 250 was a nice start but we continued to put into it when we had spare cash and their birthday money.

I remember getting the CTF pack and trying to understand what is a stakeholder account. Even then, I knew it had to be S&S, not cash. I chose a poor performing fund for my dd (first) and the difference between dd and ds' returns is quite staggering, . Basically dd is 3 years' older than ds and ds' returns already outstrip dd's by 20%, just by choosing the right fund and leaving it in there.

Oh well. I have to say both dh and I are professionals in industries that have little to do with finance or investments. I am the one with the appetite to get my head around figures and investments. Dh is intelligent but no way he would be interested or willing to work all this out. So I don't think it is an intelligence thing but more interest and inclination.

Needless to say I control the household expenses and do the long term financial planning.

We have topped it up with just £20pm it goes up and down but is currently worth about £5000.

It’s a good question, we started with the CTF in 2009 and then when they effectively shut down we moved it to a JISA, we’ve prioritised putting money in above anything else, as close to max since we started, that contribution has gone up and down and up and down!, and it will probably be at around £60k+ by the time DD is 18. Would we have done that without the prompt from having it I doubt it, probably some money a month into a savings account but being able to forecast outcome based on input has really focused us on maximising it as much as possible. She knows it exists, we’ve already talked about expectations for it (deposit on a flat/house) whether that’s at 18 as an investment or further down the line, and talked about how and where we move it to.. ISA/Premium Bonds etc until she’s ready to use it. It is of course a risk, she may go off the rails by 18, but for us a risk worth taking as I genuinely don’t think we’d have saved anything like that for her otherwise. I hope by continuing to discuss it we don’t drop a shiny, sparkly exciting bomb on her which she blows on “fun stuff” but it is hers so can only hope!!! I think they were great, just putting £10/month in can create a very reasonable pot and a great way for family to top up as and when possible.

I can't understand why you wouldn't have spent a few minutes investing it - I seem to remember there was lots of guidance on how and where to do this back when they were a thing - and then just leave it.

I appreciate not everyone is in a position to do this, but DH gets an academic salary so we're ok, not rich but not on our uppers either. He adds £100 per month to both boys' funds and the idea was always that it would essentially send them to university. The younger one is severely autistic and we'll always have to have power of attorney for him, but there will be no shortage of things he needs. Anyway, the accounts now have quite a bit more in than our own savings do.

Dd's was set up in 2004 I think - stocks and shares one. We added £25 a month and it ended up with a balance of about £7k when she got the proceeds this year.

Ds's was from 2007 and I moved it to a junior isa 2 years ago. It's current just under £7k with 2 years to go until ds is 18

I can't find the paperwork for DDs but they're not 18 yet. DS was t given one, there was a cock up as he was prem, when I had the ability to chase I was told they would look into it. They then sent a snotty letter saying they had invested it for me as we hadn't bothered! We had never been sent the bloody paperwork to invest it.

I've now no idea where each one went.

Ds got his last year. It was just under £1000.
We received the initial £250 and just left it, we opened our own savings accounts for all the children where mostly my parents have been adding small amounts
Tbh it was free money from the government and 19 years ago the young cynic that I was wasn't sure if there would be any conditions set upon how DC could use that money so we saved the annual statements and only told the children about the trust fund when eldest was 16.
DD who is now 16 has around £800 in hers
ds now 14 has around the same amount.
I'll take any advice for Ds 14s account on how to grow it if that's possible in these tumultuous times.

I invested my DS’s CTF, added bits to it here & there and it grew to a very nice hefty amount that is currently helping to cushion the cost of the next few years at Uni.

I felt cautious about adding money to it.

ATT I lost more than half of my small pension.

I paid 4% of my wages for 8 years while my employer added 4% whatever it was invested into died a death.

must check wherever that is now, I wouldn't know where to start

Tbh, I put my dd's investment in a trust fund that didn't gamble on the stock market,given that whilst I was pregnant, there was a global financial crash! So when the time came, I read the pack and chose the right thing for my situation baring in mind my child's future. Needless to say, hers is no worth quite a few! All by myself

Ohhh
I hate to say this but that was exactly the time when you should have been investing more into it. It’s true that some children (eg those born in late 2007) were unlucky timing wise in getting their £250 just before the financial crisis, but their parents could have more than made up for that by adding more every month during the crisis when shares were super cheap to buy. (See below for a very simple example.)

It is bad luck and annoying to have received a free £250 just before a market downturn but it is not correct to say your CTF “wasn’t working” as a result. It would have worked out very well if you had contributed a little regularly as the Government hoped you would.

As for moving to a JISA, there’s nothing wrong with those at all - they carry the same tax benefits as CTFs and in fact there’s much greater choice of JISAs.

• example: Start with 250 units worth £1 each = £250 valuation Market falls 20% = £200 valuation Buy 250 more units over 24 months at average price of 80p = £400 total valuation Market recovers back to where it was = 500 units worth £1 each = £500 total valuation

You have made a £50 profit on your additional investment, which has cancelled out the loss from the market crash, and you also now have twice as many units to grow in value as the market keeps on rising.

This example assumes no dividends from your units for simplicity but if you reinvest the dividends in more units you’d end up with even more than 500 units/£500.

We invested it and added to it from money when she was born and the odd top up from birthday money etc. It’s gone down due to the market but is at circa £4K

A few years after getting the CTF you could turn it into an ISA, which we did. Got a better interest rate too and not related to fluctuations in the interest rate.

Has anyone whose DC has reached 18, found their DC have been targeted with marketing on how they can spend their CTF?

We never added to DS's CTF as the terms of the fund were that the child was absolutely entitled to the fund at the age of 18. That meant the amount was so small, it was not worth investing in a S&S. It has increased in value, from interest earned, but probably not in real terms once you take inflation into account. We have our own S&S ISAs, and we can use funds from our own investments and savings to help him if he goes to uni or buy a car etc.

Funnily enough I was talking to a lady the other day who's son has just turned 18 and got his money... she said her and her husband invested in and then added £60 each month for him - it had £22,000 in it when he turned 18!!!!!!!!! I was floored when she told me. Her and husband worked I'm finance all their lives and obviously knew what to do with it. My daughter has just turned 15 and I have no idea where it is 😵‍💫

She's a 2007 baby :) It wasn't working at the time. Instead we've regularly saved elsewhere, mostly at 10% rate. Felt much saver that way and she's got £20k coming to her so happy with our decisions.

Well done with your investment and returns. It doesn't really matter where you save/invest, so long as you do it reasonably consistently over time. I think you were already doing what Zeigfield advised, just in a different investment. Hopefully you used your or dh's ISA allowance because otherwise you don't get the tax shelter which the CTF would otherwise have afforded. In other words, the 20K may be subject to capital gains tax.

I’ve just saved the link for looking for it! Only one of my dc got a ctf.. I didn’t really understand it at all and went for the option of do nothing and let the government invest. There was no way we could have afforded to save for all the children. Hopefully ds will at least get something when he turns 18 in a couple of years.
That might sound really bad to the demographic on mumsnet, but it was the norm in my friendship group at the time.

I was going to start a post about this. My DC is almost 18 and the last annual statement says that the current value is £230. We didn't have any extra money to contribute to it but I had hoped it would at least be worth more than the original value after 18 years. We would have been much better off just putting it into a regular savings account.

DD13 got the cash and we just put it in one of the building societies. It’s not worth much. About £350 at the moment or even less. DD10 missed out on this. I do have other accounts for them separately though but not locked away. I save cash so I can then take it out to buy their uniforms and brothdau/Christmas gifts. Extra gift money gets added and it’s not all spent. Grandparents both have a decent savings account for them and so does another relative. Those they’re not getting until they’re 25 or something so I’m told.

@blueshoes
well it does matter where you invest… as you say yourself, if you don’t use a tax sheltered wrapper then you are scoring a big own goal.
It would have to have been in an adult ISA back then…which presumably means the adult could never use their adult ISA allowance for themselves if they were dedicating it to their DD and topping it up regularly each year.

But I am afraid I just don’t believe in @motherofawhirlwind ’s “10% rate” - !! - since 2008 the BoE base rate has spent most of its time below 0.75% so no savings product, let alone an ISA wrapped one, has had a “10% rate”. Perhaps she is mistaken and this was not a safe savings account at all but a much higher-risk investment account that has averaged 10% annual returns…

Kids, if you are out there reading this, please
be aware that if anyone phones you up offering a risk free return at 9%+ over base rate, they are scammers.

@blueshoes .
It's definitely not intellectual thing!

It took me a few years of in depth research to get to where I am. I count spout percentages and figures at anyone but I'm confident and secure in my knowledge now.

I still have a lot to learn.

One book that has been brilliant is one a man wrote for his daughter called " the simple path to wealth".

By the time I'd read it I had already found the vanguard path.

That initial attempt by the government to educate us all was admirable but far too complicated.

@MrsRinaDecker

Why not look it up see if it's in cash or share's, then move it into a junior ISA?

See if you can really grow it before he gets it?

Mumsnet.is so funny...on the one hand people are penniless and can't afford to put lights on but then people seem very casual about growing money and not taking up opportunities

@Mba1974 yes that's what we are doing, preparing them for it years before so it's not as you say this shiny unexpected bomb!

@failingmother that's absolutely amazing! What an incredible growth!