Are Child Trust Funds worth it?

[balia]

Got the annual statement for my DS CTF today - it has made £24 in 4 years. Now I know it was free money in the first place, I'm not moaning - just wondered if it's worth investing any of our own money? The letter with it seems to suggest that putting £10 a month in will make it worth much more when he is 18 - and that happens to be the amount I do put away for him in an ordinary bank savings account.

Does anyone know if the CTF's are a good bet?

Are you asking about topping up your child's CTF account to up to the £1,200 per year maximum?

If what you want is a tax shelter, yes it is.

If what you want are returns, depends on what you invest in! If you put it in a savings account, you cannot expect to earn much in interest over the last 4 years. If you put it in a equity or stakeholder account, you have more potential for upside but also risk losing capital.

CTF's are a riskier bet than a fixed interest savings account but, then again, they are tax-free, long term and, if you get a good one, the returns can be good. You've only had yours for 4 years and there was a massive slump in the stock-market three years ago. In the next 14 years the picture could be very, very different.

If you'd put your £250 in a savings account paying 2% 4 years ago it would be worth £270 today, to put it into perspective.

I've been saving £20/month in a CTF account for the last 10 years (my son was born pre-vouchers) and my £2400 contribution is now worth £3200. A savings account would not have kept pace with that.

what i don't like is the fact that you can't take the money out and the child can get hold of it at 18 and potentially waste your hard saved cash in an instant

@Morph2... it's the child's money at the end of the day. But we should, as parents, be able to use the intervening 18 years to give our children some guidance on how best to use their trust fund when they get it. Tuition fees, a car, a downpayment on a flat, setting up in business.... Pessimistic to assume they'll waste it.

My sons is in stocks and shares and hasn't made any money on it in 3.5 years. I have done nothing with it. I put money in to another savings account instead where I feel I have more control over the money.

I've not put any money into my child's trust fund myself, I do save on a monthly basis into an isa and also into a high interest account for my dcs and they have inherited some money which is also in there. The reason I don't put it in the ctf is that whilst I hope that at the age of 18 they would use the money wisely, there is the risk that they would spend it on unwise choices. I would rather save the money and give it to them for sensible choices (college, travel, deposit) etc than trust that they won't piss it up the wall make unwise choices at 18 with my hard saved cash!