UnaVida | Investing for Children – Child Trust Funds

Investing for Children – Child Trust Funds

Child Trust Funds were introduced for children born between September 2002 and 2 January 2011, the introduction of Child Trust Funds preceded the introduction of Junior ISA’s.

Child Trust Funds still exist but since April 2015 you have been able to transfer your child’s CTF to a JISA if you wish to.

A lot of parents have been tempted to do so, as a far wider choice of provider and lower charges has proved quite compelling. If you do decide to switch your CTF for a JISA, you cannot change your mind after the switch has been made.

Both CTF’s and JISA’s have the same annual allowance of £4080.

It is worth mentioning an old favourite of mine – taking out a pension for your child, this has the additional advantage of tax from HMRC that is added on top of any contribution up to £2880 in any one financial year.

Grandparents often like to provide funds for these little pension pots, the grandparents act as sponsors.

Why on earth would anyone consider making a pension contribution for a child?

The answer is that even a small investment into a pension early on in life can turn into a considerable sum of money – if invested wisely.

For the grandparents a further consideration is that long after they have passed away the grandchild will have cause to be reminded of their generosity.

It would seem sensible for parents and grandparents, who wish to benefit their children and grandchildren to take advice, particularly as investments for both JIS and Small Pension Pots need to be chosen with particular care.

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.