You are here: Home - Saving & Banking - News -

Savvy parents could have accrued £500

0
Written by:
02/04/2008

Parents taking full advantage of Child Trust Funds (CTFs) could have received £497 in interest if they invested the £250 voucher and the full £1,200 allowance each year since the funds began.

CTFs were launched three years ago. Each child born after 1 September 2002 receives a £250 voucher which their parents invest. The money can’t be touched until the child turns 18 and the idea is that each child will have a good financial start to their adult life.

Michelle Slade, analyst at Moneyfacts.co.uk, said: “The ‘Bank of Mum and Dad’ has become a well-known phrase over recent years as many children rely more and more on their parents to help them get on the property ladder. Recent events have shown that in order to get the cheapest mortgage deal you need to have a decent sized deposit. What better gift to give you child at 18 than a nest egg to help them buy their first home?

“Parents can opt for two main types of Child Trust Funds. The first is a cash-based savings account. Rates as high as 8% are a fantastic incentive, particularly if parents are making additional top-ups to the accounts.

“The second Child Trust Fund invests in a selected investment fund where the value rises or falls depending on how well the fund performs. Parents can choose to invest in a stakeholder fund where the maximum management charge is no more than 1.5%, or non-stakeholder where the charge can be more than 1.5%.

“Last year the performance of these stakeholder funds was negative but this is a result of the poor performing stock market and the ongoing credit crunch. Child Trust Funds are long-term investments and investment versions are expected to outperform savings versions in the long run.”

 

Tagged:

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Buliding societies bring in record savings

Building societies recorded an influx of £1.35bn in savings in February, the highest February intake since 1997.

Close