Child Trust Fund - what to do with it ?

[KangarooKenny]

DS is 18 now and needs to decide what to do with his CTF. He wants to put it somewhere that it will increase rather than cash it out.
He can get 2.9% if he moves it to a CTF Matured Saver account.
Im thinking he should put it in a Lifetime ISA. What do you all think ?

I don’t think he will add any more to it.

We’re planning on putting it into a LISA so watching with interest

We moved the DC child Trust fund as soon as we got them and they've made a tidy sum without adding anything to it

I was thinking split between lisa and premium bonds and an emergency fund for University. Main goal is to get him to contribute even £5.00 a month in his LISA to get him in the habit of saving even a little bit.

ds(18) put his into premium bonds and is feeding £4k a year into a LISA for a future house deposit. You get £1k for each £4k deposited but it must be used for a house deposit or you will actually lose money if you withdraw for any other reason.

He is at uni for next 5 years, so feeding in £4k a year will give him £20k + £5k bonuses + interest towards a house deposit when he has finished uni.

Premium bonds has returned 2.7% so far, but with interest rates increasing now considering shifting it to an ISA until it can also go into the LISA.

How much is it worth?
What does he want to do eg uni? House?

Depends how much it is but I would spread it around as others said and get him investing a little.. Proper shares investing.

What does he want to use it for ultimately and when?

if as an emergency fund - highest interest easy access account, check mse martin

if investing for house deposit LISA makes sense

if investing for longer-term, depends on aims/timescale etc. suggest looking at Pete Mathews meaningful money podcasts - his book is a good intro to the key points of personal finance could be worth buying him this

We are encouraging DC to put it in a LISA too. £4k per year. They are in agreement now, but hopefully still will be when they hit 18.

How much is it worth and how near in the future is he likely to need it. Ds’s was worth £500 and he used it for Uni halls deposit.

It’s only about £400.
If we did the LISA and never added to it, would he just get 25%, or do you get interest as well ?

You get interest too (ds's is currently 3.5%, drops to 2.75% after year), but it is only worth it if you are sure it will go to a house deposit as a first time buyer (think it goes via your solicitor when buying), if you withdraw for any other reason you lose 25%.

Example -

Deposit £4,000 you get £1,000 bonus = £5,000 to go towards house deposit.

Withdraw cash instead of house deposit £5,000 - 25% = £3,750.

Agree with @Blanketpolicy
LISA can only be used for a first time buyer via a conveyancer or solicitor, otherwise it cannot be touched without incurring a 25% withdrawal charge (unless over 60, or terminally ill with less than 12 months to live) i.e. money tied up.
Perhaps an ordinary ISA would be better and, given it’ll be a long term investment, a stocks and shares one?

Where to ?

The bank it’s with offer moving it to an ISA, so perhaps we’ll do that, so it’s not so tied up in the future. He might not ever buy a house.

What is he doing next?

My dd put hers in a LISA but she's gone to university so isn't going to be adding £4000 a year to it for quite some time.

It has encouraged her to save more though, having the LISA. When she sold her car before she went to university she put the money in for example where as before she would have just put it in her current account and spent it on eyeshadow.