CTF - better than a savings account?

[CattyB]

Have 4 children. My youngest 2 have CTFs started with the £250 recieved from the government with an additional £10 each month from us. My eldest 2 have savings accounts into which we have paid £10 since thety were born. Was wondering if I should invest their money in some kind of trust fund, periodically buy premium bonds or just leave it where it is? Any advice very gratefully received. Thanks.

Her goes for my tuppence ha'porth! If your eldest are getting a decent interest rate, or move it to a provider with a better interest rate. I don't know if you can open CTFs for older children, but there is a cap on what you can pay in per year, so depending on what you have already saved, that may not be appropriate. Other trust funds are expensive to set up and maintain since Gordon Brown in his 'wisdom' messed them up completely - unless you are paying megabucks in each year, the running costs could eat up all the capital growth. You could never win anything with premium bonds, in which case the capital won't grow as you don't get interest on the money. The main disadvantage of a savings account is that the children could legally be entitled to do what they want with it well before they reach 18 (unless of course you don't tell them it's there). There was a really interesting episode of the money programme on radio 4 on this subject a couple of weeks back - you can probably listen to it still on their website.

Her goes for my tuppence ha'porth! If your eldest are getting a decent interest rate, or move it to a provider with a better interest rate. I don't know if you can open CTFs for older children, but there is a cap on what you can pay in per year, so depending on what you have already saved, that may not be appropriate. Other trust funds are expensive to set up and maintain since Gordon Brown in his 'wisdom' messed them up completely - unless you are paying megabucks in each year, the running costs could eat up all the capital growth. You could never win anything with premium bonds, in which case the capital won't grow as you don't get interest on the money. The main disadvantage of a savings account is that the children could legally be entitled to do what they want with it well before they reach 18 (unless of course you don't tell them it's there). There was a really interesting episode of the money programme on radio 4 on this subject a couple of weeks back - you can probably listen to it still on their website.

Her goes for my tuppence ha'porth! If your eldest are getting a decent interest rate, or move it to a provider with a better interest rate. I don't know if you can open CTFs for older children, but there is a cap on what you can pay in per year, so depending on what you have already saved, that may not be appropriate. Other trust funds are expensive to set up and maintain since Gordon Brown in his 'wisdom' messed them up completely - unless you are paying megabucks in each year, the running costs could eat up all the capital growth. You could never win anything with premium bonds, in which case the capital won't grow as you don't get interest on the money. The main disadvantage of a savings account is that the children could legally be entitled to do what they want with it well before they reach 18 (unless of course you don't tell them it's there). There was a really interesting episode of the money programme on radio 4 on this subject a couple of weeks back - you can probably listen to it still on their website.

The plus side of the CTF is the tax status, but the downside is that the money goes to the children when they are 18.

If you haven't already invested your ISA allowance you could invest a monthly amount in an fund ISA. Typically shares outperform cash over 10 years or more, and by investing monthly you are in part mitigating the risks of share fluctuations. You can follow a similar investment pattern to stakeholder funds are transfer into lower risk options from the age of 13 onwards. The advantage here is that you decide when the children get the money.

If you have opted for a cash CTF then of course you can also opt for a cash ISA.

I really don't now much about the Child Trust Fund but I do know the money belongs to your child when they are 18 and you will not be able to control whether they withdraw it or what they would spend it on. I am unwilling to add anything more than the Government puts in because I do not want my son to buy a motorbike or similar when he is 18. It is so hard to predict what your LOs will be like and how your relationship will be.

Both my LO have savings accounts but it will need 2 signatures to release the funds.

Do children have their own ISA allowance?

Thanks. Will look into ISAs. Not very money minded but with potentially 4 kids to fund through uni (or whatever) feel I should start preparing now.

Oops, sorry for the multiple posts - my computer went into slow mode, and I kept pressing buttons

No you have to be 16 to hold an ISA.