I've just read the following (see below)on moneysavingexpert and now i'm worried about what to do. I have paid £50 a month into ds1 's trust fund for six years and I am nnow about to open a second tf for new ds2 but foolishly i didn't realise this money goes straight to the child
Do I keep paying in or change to an isa that I can control incase my dc develop a money-burning bad habit by 18? Is there a better product out there and are ctf going to become a bit rubbish?
I don't know much about money - anyone got any advice?
Where is the best place to save for kids future?
from msexpert -
Child Trust Funds Scrapped!
Warning Switch Now! When products are defunct, rates plummet
The Chancellor's just announced his £6bn spending cull, and Labour's Child Trust Funds policy, which gave every child at least £500, is a victim.
It also allowed parents to save tax-free alongside it, yet often didn't deliver its aim to get parents saving towards a 'college fund'. I suspect, the main mistake was full control went to the child at 18, prompting worries about rebellious future teens.
What are Child Trust Funds (CTFs)? They're a tax-free way to save or invest for your child where you can put up to £1,200 a year in. The big boon is the state also adds a £250 voucher (£500 for low income families) at birth and again aged seven, ie, min. free £500.
When'll it be scrapped? From 1 August, the Govt plans to ditch the payment for 7yr olds, and slash it to £50 for newborns (£100 for low earners). From 1 Jan 2011, all Govt. top-ups stop. See: CTF payments axed
What happens to existing CTFs? They'll remain tax free, and you'll still be able to put £1,200 a year in them.
What'll happen to rates? While money can still be added to them, CTFs are likely to become a bit part pretty quickly. I doubt banks will scrap to fight for new business, meaning rates'll plummet.
Get up to 3% NOW - on new and existing CTFs! Many say CTFs already pay pretty poor amounts, yet you can transfer to a new deal (ask the new provider to shift it for you). The top payer's Yorkshire BS at 3% AER with a year-long 0.7% bonus though it's branch only. Alternatively Chorley BS pays 2.9% AER in branch or by post, see the Best Buy Child Trust Funds guide.
What about investment CTFs? We don't cover investments, as only a crystal ball gives the right answer. But, basically, with stocks & shares CTFs, you're reliant on an investment manager & market performance. Not a bad thing, as long as you're aware of the risks (ie. upside big growth, downside lost cash)
While you're at it, check out the Best Buy Children's Savings guide.
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child trust funds and saving for kids future - what's the best option now?
7 replies
seanchai · 26/05/2010 17:33
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