Child Trust Fund: What To Do?

Recent reports suggest that many people have still failed to invest their child trust fund vouchers (about 50%, in fact).

In some cases this is down to ignorance, although in other cases people are biding their time, as they are unsure about what they should do with them. It’s worth noting that parents have until March (I believe) to invest their vouchers, after which point the government will invest the voucher for them.

In some ways, the child trust fund is like a pension for kids – although the “retirement” in this case happens when the child becomes an adult (the investment is paid out at the age of 18). A sensible option (in my humble opinion) is to be a little more adventurous with the vouchers to begin with (as if anything goes wrong, there are a few years to make up losses), but as the child approaches the age of 18, you should be more cautious with where the money is invested. With the vouchers, you have the choice of investing in cash funds or stocks and shares – so taking the above into consideration, you may invest in the more risky stocks and shares until the child is, say 14 or 15, and then move the money into cash for the last few years. Of course, this all depends upon how much risk you like to take, but this is standard practice for pension funds (or at least should be!).

The official Child Trust Fund website is, naturally, a good place to start getting information, but the following are a few of the providers offering Child Trust Funds:

On a related note, it is encouraging to see a report that parents are saving more for their kids than they used to, and so the government can take some credit for this, as it appears that the system may be having the desired effect – but I think they need to do more promotion to make sure that parents know their options.

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