Is it a good time to invest in DS's Child Trust Fund?

[Jojay]

We have £1k to invest for DS2.

We paid the same amount into DS1's CTF when he was born and have added to it via a monthly direct debit.

Last year, due to the state of the stock market, the fund 'lost' around 50% of what we put in.

We now have some money to invest for Ds2.

Should we put it into his CTF on the basis that we are buying shares at the bottom (?) of the market and as the market recovers, the investment should grow?

Or are we simply better off stuffing the money under a mattress (metaphorically speaking) until the economy recovers?

Views please.

You do know that any money you put into your childs CTF is paid directly to them when they turn 18.

I wouldn't be putting any investments into their CTF. Far better to set up a fund for them in your name that can be given at your disgretion.

Buy buy buy buy buy buy buy

Do not back out of stocks now, it is an totally inappropriate reaction to the current market.

The stock market has ALWAYS outperformed other investments over any 20 year period.

Your CTF should be structured in a way that the investment is moved to low risk as the maturation time approaches, so when DS is 15 or so it should be automatically moved to something like bonds etc.

You will, as we will, make much more on this childs fund than the one you started last year because you will get lots of lovely cheap units.

Just check out the spread of the fund, and/or ensure it is a tracker.

That is interesting,Rempy.I have put all dds DLA into a crappy childs account and was wondering whether to move it into her CTF,EVEN THOUGH IT HAS LOST A THIRD OF ITS VALUE IN RECENT MONTHS.I figured that EVENTUALLY the markets will pick up,and it is a long term investment.It is with HSBC.I think it is a tracker one ,will have to check!

Only issue with moving is, as fatjac has pointed out, that the money belongs to the child on maturation, without ANY parental control.

We like to joke it will fund their crack habit. In 16 and 17 years time, the joke may be on us...

It is a long term investment - what you can do is invest in it over the next couple of years, then leave it - you make the most money from the earliest investments.

You can then redirect your DLA into a different vehicle for your child in a couple of years time that is either still in their name, (and suffers from the same problem of being money that is out of your control) or is in your name but earmarked for them - in that case it can still be stock related until such an age as you deem the risk to be too high (perhaps 10? 12?) or you can go for lower risk bonds etc.

It really is a great opportunity if you have money to invest, so long as the fund you are investing in is sensibly spread, or has the relative security of being a tracker.

PS, I have an ethical fund for DD, it has lost 45%..... feel slightly sick. Go green! Lose Lots!!

Thanks everyone.

Rempy - that's what I thought, just needed to convince DH.

Fatjac - that's a very good point about the DC having control from 18. Will have to mull that one over.

Thnkas again