To not have a clue what to do with DDs trust fund money

[mum2b09]

I got the cheque from the child trust fund when my daughter was born and still havnt got round to doing anyhting with it. we moved house and it just sort of got put in the draw on my to do list.

The thing is although i got the pack i really dont know where to invest the money.

Can i just put it in a savings acount for her and add to it?

Or do i have to put it in shares with risks?

I dont really understand it all would really apreciate it if anyone can simplify it abit.

Shes not over 1 so i can still decide where the money goes

thanks

Ds is nearly 3, so I did his a while ago now.

No advice but I can tell you this:

I put it in a "medium" risk fund with halifax as thats who we bank with.

After 1 year it was worth less than 75% of its original value.... had we not bothered to do anything with it, it would have been worth the original value

Figure that one out.

Its all far too complicated. Id be happy to put it in a little safe account where i could ad abit to it every now and again and it not have any risks.

Its all far too complicated. Id be happy to put it in a little safe account where i could ad abit to it every now and again and it not have any risks.

I have put it in to a non risk account at the building society so there is no way I can lose money. I then add £10 to it each month to give her a little extra by the time she is 18. You can just put it in to a no risk savings account it doesnt have to be in a share one with risk. The choice is yours.

I signed up with lloyds, you can do it online very quicklyhere. I don't think it's the best deal out there.
i dont think you can sit on the cheque for very much longer though, there is an expiry date on it.

Well, the first thing to do is just bank the cheque in her bank account before it expires. It's not like you can't then reinvest it when you understand better what to do with it.

To put it simply you then have 3 choices

1. Cash - in other words put it in a savings account and leave it there. Interest rates are around 3% at the moment(best case). If you do this, you wont lose the money as it's guaranteed by the government, but by the time she is 18, if you account for inflation, you wont have much more than £250 there. In other words, you will have preserved the £250, but you wont see much growth.

1. Bonds - this is basically debt issued by companies or governments. It is slightly higher risk than cash because the company (or less likely, the government) could default. However, the rate of interest would be higher than just putting it in a svings account. The best way to invest in bonds is in a bond fund where you effectively buy shares in a fund that owns a lot of bonds, so you diversify your risk. If one company defaults, it's just one of 50 bonds held by the fund, so you're not wiped out.

1. Equities/ Shares - Again, the easiest thing to do is invest via a mutual fund which owns a lot of shares and is managed by a fund manager who's job it is to manage the portfolio to get the best return. Returns on shares are potentially much higher than cash but are more volatile. eg In October 2007 the FTSE 100 was around 6,700. It fell to 3,800 by early 2009 before rebounding to 5,600. However, at some stage over the next 18 years, chances are that the FTSE will be significiantly higher than it is now, so if you time it right, you're likely to get a better return than cash/bonds.

There are lots of companies that provide mutual funds for equities and bonds. They include Invesco Perpetual, Fidelity, Standard Life, Blackrock- to name a few. If you google "best performing funds" you'll get some ideas.

What you do really depends on your personal circumstances. If £250 is a lot of money to you and you can't contemplate losing it, maybe cash is your best option. However, if it's a "nice to have" but not a train smash if you lose some of it, you could consider bonds/equities.

Hope this helps.

We put DD1's in an HSBC-run fund, back in 2003/2004. I don't think it's grown much to be honest. But then I was sceptical of it in the first place and decided NOT to add any money to it as I didn't want to risk losing it (I know that some years it has lost value but I don't follow it avidly).

We put the equivalent of £10 per month into a regular childrens savings acct for her instead as at least our investment is guaranteed. Sure, the interest rate is low but we're not looking for big returns right now - we're after "Secure" money instead