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?

DS is 14. We put his in a medium risk account and add 10 pounds a month - not loads I know but at the time all we could afford. It has gone up and down dependent on what’s going on with the global markets but last time we looked he’s got about £2900 , my youngest son didn’t get the 250 but we put 10 pounds a month away for him and will try and make sure he gets the same when he’s 18.

I will add that as DC's uni "parental contribution" is £5k per year as they only qualify for the minimum loan which doesn't even cover his rent never mind food, we saved for DCs in their own accounts in their own names, but we also saved so that we could cover that £5k per year per child so we have a savings account with money to cover that. Ds1 is already at uni.

Handing an 18 year old tens of thousands seemed like madness hence why we saved separately and under our control. He is very sensible with money but you never know how they will behave when given a massive lump sum of ready cash.

I’m hoping they’ll use it for their first car or to go travelling or something. I’m still not telling my (currently) lazy ass money wasting teenage boy til I have to!

When they were primary school age? No. It was money from relatives abroad so they didn’t miss out on actual presents fro
immediate family.

Having said that we bought them fruit trees on their 1st birthdays which are doing nicely in the garden now 😁

Absolutely. I've accepted it now (it was his money) but it pissed me right off.

For each of our DCs, we put their 250 into stocks and shares CTF, then converted them into JISAs. Dh and I have contributed into them regularly over the years as we have spare cash. The idea is that the dcs will use it as a deposit for their first property or some other big ticket item.

Now that DD is 19, it is converted to an ISA and is hers. She has not touched a penny in that account, nor asked to see it. Not so sure what DS will do once he comes of age but I am hoping he will be sensible.

Both are generally quite frugal, like a bargain and don't tend to splash out on their pocket money or ask for massively expensive designer stuff. Ironically, as it is a big enough sum to make a difference towards purchasing a home, I don't think they will touch it as opposed to a few thousand where it is too small to make a difference and hence might as well spend it.

Never did anything with DS1's, it's worth about £900.

It's not always laziness, I knew absolutely nothing about the difference between different savings accounts etc and so since it said if you don't choose we'll choose one for you I just thought well I'll just do that then. Surely it doesn't matter where it was invested because nobody could have predicted the future 18 years' worth of financial developments even if they did know about finances.

DS doesn't know about his, we live abroad now so his friends likely won't get one except for the one other who was also born in the UK.

We don't have savings of our own so I haven't saved for the DC either.

I did nothing; Ds got around £500, he got it out as soon as he could and spent it on the naffest track suit and an armani rucksack. complete waste of everyone’s money in his case

We added about £4000 over the first five years or so but then circumstances changed and we didn't add any more. Last time we checked it was up to £18,000 so we are very happy with that! Hopefully with that and our own money we'll be able to cover living expenses at Uni so he'll only need to get loans for the fees.

We moved abroad when dd was 2 so weren't eligible for ISAs. I left it where it was and now she's 18 it's worth about £800. She's glad of as she's just started Uni but we need to sit down and work out how to extricate it as she doesn't have a UK account. We saved money separately for her and she has quite a large sum in her local savings account - which became fully hers at 18. I was a bit nervous about that, but doing anything else would have had tax implications. Luckily she is very tight with her own money and doesn't fritter it. She has her eye on a flat deposit.

The whole point of keeping going with monthly contributions is that you balance out market movements.

Look at it this way: up until recently you have been buying expensive shares in companies. Now they are much cheaper - so effectively with the same contribution you will get more for your money every month.

When the market eventually recovers, the increase in value in the cheap shares you buy now will help balance out any loss in value of the expensive shares you bought last year.

If you can afford it, I would keep going.

This.

The big winners over 18 years are those who moved into a stocks and shares CTF early on and, even better if they could have afforded it, those who continued to contribute into the stocks and shares CTFs over the years.

That is how you can relatively easily end up with CTF pots worth tens of thousands at 18.

Although there is currently a blip, over those last 18 years, most bog standard index linked funds would have gone up massively. It is comparable to investing in UK property.

I’m someone in group 2 and have contributed diligently for 18 years between £50 and £100 for pcm. I got yearly statements and some years the investment grew by double my contribution, some years it grew by less than my contribution. I invested initially with childrens mutual invesco perpetual income fund ( as that was recommended in the Sunday times the year my dd was born) and then switched to a foresters fund. I can categorically say I would not have opened a S&S for my dd without the CTF cheque. I would have opened a normal cash saving account ( and did anyway for birthday money) so for me it was a fantastic idea and opened up the world of investing over saving.
and yes parents could easily have opened a jisa for any kids born outside the years the scheme ran and contributed in the exact same way.

And I disagree child are oblivious until their parents tell them about it. They all discuss it from about 16 ime. My dd knows exactly what all her friends got as they told each other! Not much parents can do about that which is why trying to hide it from a parent pov is utterly pointless!

@sashagabadon Snap, about the investing vs saving, and needing a 'nudge' to start the S&S process.

Not only do they talk about it, but when a child turns 18 their provider writes them a letter. Opening your DC's post is a whole different level of CFery, right?

A PP mentioned that it takes ages to withdraw the funds. This was DD's experience; identity checks, and then they sent a cheque (remember those?) as an additional safeguard that parents aren't taking the money.

Maybe oblivious was the wrong choice of words… I guess my point was really that it was supposed to encourage young people to get into good savings habits early yet (if this thread is anything to go by) it seems like it’s the parents doing all the saving/contributing - and the young people either don’t know about it or are just planning what they are going to spend it on.

Some kids are oblivious. I’d mentioned it to my son once when he was about 14, when he was next to me as I was opening post and there was a letter about it. When he got the letter at 18, he’d forgotten about it, as had me and his dad. Definitely not discussed with friends and he’s yet to do whatever needs doing to get the money many months later.

I did nothing with DCs. Can't even remember where they were invested. DS1 was 18 this year. He applied to find it, got the money within a week and bought a VR headset.

That's still really good - we saved £100/mth into our son's and due to the fairly poor performance of the HSBS S&S CTF it was worth £31.5K when he transferred it out at 18 - so I think £22K from £50/mth is still good going in comparison. Our Covid drop wasn't as dramatic - your son's was amazing before that!

I think how it is meant to work is that the parent shows the child when they are old enough how their pot is growing from regular contributions so that the child sees a correlation between putting a small sum in regularly and ending up with an ever growing lump sum.

You can get that from cash deposits through interest over time but I think the lesson often lost (even on parents) is that the investment grows much more over the medium to long term (18 years) if you invest in stocks and shares. Not enough people in the UK know this. It seems to be either cash (safe but very low returns) or property (generally higher returns) but no in between. S&S is actually a great in-between investment because you don't need huge amounts of capital like property and there are almost no holding costs (unlike property which you have to maintain) and it comes with dividend income. If you chose a bog standard index-linked fund and put in a small sum every month over the last 18 years, you'd be laughing.

The more the CTF nudges parents into dipping into investing in S&S, the better.

as it is a big enough sum to make a difference towards purchasing a home, I don't think they will touch it as opposed to a few thousand where it is too small to make a difference

Oh the privilege of some on MN ...

The big winners over 18 years are those who moved into a stocks and shares CTF early on

So why didn't Gordon put the money straight into S&S for the kids instead of leaving it up to parents who might not understand?

Good question. I think these days, if the Govt introduced this policy, the default would be in S&S and if you didn’t want that, you’d have to opt out - a classic nudge in the direction of doing the right thing. Back in 2001 I think the view was that parents should decide their own risk level, starting from zero risk (ie cash) as default.

Remember also in 2001 nobody knew about nudges in government. Thaler and Sunstein’s classic book Nudge wasn’t written until 2008, and the UK Government nudge unit, one of the first in the world, wasn’t set up until 2010. So in 2001, CTFs weren’t seen as a nudge so much as a straightforward way of redistributing wealth (sort of similar to the thinking behind a universal basic income) to families who had not historically been able to accumulate any.

Interestingly, in the 2010 election Labour wanted the scheme to continue as was, the LibDems wanted to scrap it, and the Tories wanted it to focus only on the poorest one third of families and those with disabled children. If it were done today, I suspect Labour would probably take the same line as the Tories did in 2010 - better to focus the help on those who most need it. You could actually argue the old CTF scheme widened inequality rather than narrowed it, because wealthier families were more likely to take the £250 and turn it into £30k.

Never added a penny to it and to be honest had forgotten all about it until I read this thread; surprised they don't often seem to contact us about it. But I do still have the paperwork, and we haven't moved house, so it shouldn't be too much of an issue to sort it out.
Whatever she gets, it'll be something for her to look forward to for next summer and might buy hopefully her a plane ticket or some other contribution for her year out.

It has literally been the only responsibility that DDs dad took for her in her 19 years, and even then I'm convinced he somehow thought he'd have control over it.

I checked it was invested but then forgot about it, he gave her the paperwork on her 18th birthday and she had just over £900, still does actually, saving it for topping up driving lessons if it's needed/another test or towards a first car.