Is your child trust fund working hard enough? – CTFs two years on
Rachel Thrussell, Head of Savings at moneyfacts.co.uk – the money search engine, comments:
“Figures from the BSA revealed a healthy first quarter for Child Trust Funds, with 49,000 accounts opened by providers who offer both cash and stakeholder options. A massive 73% of parents opted for the cash accounts. Overall 25% of all CTFs opened by parents are cash funds.
“It is great news that more parents are taking the initial step to invest their children’s vouchers. Investing the voucher themselves allows them to chose between cash or equity based investments, and can mean the money is invested for their child at the earliest possibly opportunity.
“With an 18 year life span CTFs are a long term investment, and with the Government favouring equity based schemes, it is worth considering both markets before you take the plunge and invest your child’s voucher.
“So if you had invested your £250 voucher two years ago at the very start of the scheme, what are your savings likely to be worth two years on?
“The first chart shows the growth of a selection of cash based accounts. The average growth is just over 10%, providing on average interest of £26.32.
“Compare this with the value of a selection of equity based funds, and it is clear that the growth of these accounts has far exceeded that of the cash based funds, but we must remember that these values can change over time. On average over the last two years these funds have grown by 33.72%, with a average value of £334.30.
Provider |
£250 value as at 5.4.07 |
% Growth |
Abbey |
£271.40 |
8.56% |
Britannia BS |
£277.88 |
11.15% |
Furness BS |
£276.60 |
10.64% |
Hanley Economic BS |
£279.87 |
11.95% |
Nationwide BS |
£275.36 |
10.14% |
Skipton BS |
£276.82 |
10.73% |
Average |
£276.32 |
10.53% |
Provider |
£250 value at 5.4.07 |
% Growth |
Abbey National Multi-Manager Bal Intl Trkg B Acc |
£312.58 |
25.03% |
engage Investment Growth CTF Acc |
£329.48 |
31.79% |
F&C FTSE All-Share Tracker 1 Acc |
£353.65 |
41.46% |
Family Investments Child Trust |
£319.00 |
27.60% |
Halifax UK FTSE 100 Index Tracking D |
£335.59 |
34.24% |
HSBC UK Growth & Income Acc |
£338.69 |
35.48% |
Insight Investment Foundation Growth Retail Acc |
£345.26 |
38.11% |
Legal & General UK Index Trust R Acc |
£354.11 |
41.65% |
Liverpool Victoria Growth |
£358.37 |
43.35% |
Nationwide Tracker |
£350.17 |
40.07% |
Norwich UK Index Tracking SC 3 |
£373.01 |
49.20% |
Scottish Friendly Managed Growth |
£358.38 |
43.35% |
Scottish Widows Balanced Growth Portfolio A Acc |
£302.87 |
21.15% |
Total Average |
£334.30 |
33.72% |
“PIMA figures also released recently show that 23% of parents are choosing to increase their CTF contributions by making regular direct debits of on average £21 per month.
“This is great news and exactly what CTF were designed to encourage. If you are able to invest the full £1,200 allowance each year, the table below shows how much your cash account would be worth after just two years of investment.
2005 - 2007 |
||
Company |
Total |
Total Interest |
Britannia BS |
£2,907.13 |
£257.13 |
Nationwide BS |
£2,900.36 |
£250.36 |
Hanley Economic BS |
£2,897.70 |
£247.70 |
Skipton BS |
£2,869.54 |
£219.54 |
Furness BS |
£2,867.52 |
£217.52 |
Abbey |
£2,862.74 |
£212.74 |
Moneyfacts.co.uk – the money search engine |
||
“Something to be mindful of: Stashing away all of your child’s savings into a CTF may not be a sensible move. Every penny will belong to them when they turn 18, and they may decide to blow it all on a flashy car or two weeks in the sun. Also, who knows what the Government of the day will decide to do come 2020? So make sure you invest your child’s vouchers, but if you also save regularly into a tax-free ISA on their behalf, you’ll have that extra flexibility and control.”
NOTES TO EDITORS:
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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