Child trust fund value plummeted
Discussion
I have child trust funds for my children. I have just received the annual statement and in the last year their value has dropped by about 15% even though I have been making monthly payments into them. It is a stocks and shares investment.
Is this due to the CV19 causing the stock market crashing? Or is this investment a poor savings tool as well?
Is this due to the CV19 causing the stock market crashing? Or is this investment a poor savings tool as well?
Steve vRS said:
I have child trust funds for my children. I have just received the annual statement and in the last year their value has dropped by about 15% even though I have been making monthly payments into them. It is a stocks and shares investment.
Is this due to the CV19 causing the stock market crashing? Or is this investment a poor savings tool as well?
Your not saving though your investing in shares in the hope that they'll be worth more than when you purchased them.Is this due to the CV19 causing the stock market crashing? Or is this investment a poor savings tool as well?
Look at the ftse charts it's always gone up and down , if the funds for your kids then presumably you have to time to sit and wait a few years for the value to rise again .
Thanks for the quick answers everyone, confirming much of my thoughts.
They are Halifax products that have just transferred to Foresters. One child is 13 and the other 17 in July so not a lot of time for one of them.
I do have other investments for them so not all the eggs in one basket.
They are Halifax products that have just transferred to Foresters. One child is 13 and the other 17 in July so not a lot of time for one of them.
I do have other investments for them so not all the eggs in one basket.
The Leaper said:
I would not describe 15% as "value plummeted". And likely to recover reasonably soon.
R.
I agree.R.
OP, if the money is any meaningful amount, i would take some time to read up on the volatility of equities as ultimately a 15% fall is minor compared to many historical falls in equity. Alot of people are predicting another imminent big fall in markets once the impact of corona virus on the economy becomes more apparent.
I feel it would be smart for you to consider moving some of your oldest childs money into safer (less volatile) assets if they intend to withdraw the money to spend in the next 5 years.
Would anyone else agree with me?
SS2. said:
Steve vRS said:
I understand the risks but was surprised at the difference in values.
A difference between now and the same point 12 months ago.If you were surprised at that, you certainly won't want to compare values between the start of this year and a few weeks back.
Any account that you intend to redeem and want to minimise risk in value at the redemption date, should be tapered into safer investments, just like a pension fund should be.
I’d just let it run longer unless your eldest is planning on using it/needing it for something specific.
Intelligent Money, active here on PH (Julian PH), could be worth a look too.
I’d just let it run longer unless your eldest is planning on using it/needing it for something specific.
Intelligent Money, active here on PH (Julian PH), could be worth a look too.
The fund isn’t set up for life styling like my pensions are. I’ll leave the fund there in the hope and expectation that the markets will recover over the years. I also thought that when he hits 18 it had to close, but that isn’t the case so hopefully it will recover.
To mitigate the risks, the monthly contribution I make has been re-invested in beer to help me through lockdown.
To mitigate the risks, the monthly contribution I make has been re-invested in beer to help me through lockdown.
Simpo Two said:
Some would suggest that now is the time to be investing... you may be reducing risk but you're killing off all reward.
Lighten up mate! 
Steve - I admire and share your strategy!
John - I got those documents you sent in the post this morning and will go over them and get back to you having read them (probably tomorrow now).
This is part of the problem with getting statements. If you only look at the statement once a year its very low resolution.
BUT some would say that's a good thing as it stops any temptation to mess with the account if its down.
You need to look long term for most s&s investments. >5 yrs.
Once you get beyond a few years you can absorb even quite large market swings and still remain +ve.
The child that's 17, if you plan to give them this money at 18 you might want to consider your options now.
21, maybe time to recover.
The younger one its probably not so much of an issue.
BUT some would say that's a good thing as it stops any temptation to mess with the account if its down.
You need to look long term for most s&s investments. >5 yrs.
Once you get beyond a few years you can absorb even quite large market swings and still remain +ve.
The child that's 17, if you plan to give them this money at 18 you might want to consider your options now.
21, maybe time to recover.
The younger one its probably not so much of an issue.
Both of my daughters have CTFs and they have both fallen by about 30% since Covid-19. They were transferred over to Foresters a few years ago, and I didn't realise that they were actually invested in different funds until recently.
The youngest one has been going for 11 years with regular monthly payments and is actually worth considerably less than the total amount paid in. The eldest one is invested in a much more risky fund and is barely worth the total amount paid in.
I think I could have outperformed them both by sticking the money in a normal savings account.
The youngest one has been going for 11 years with regular monthly payments and is actually worth considerably less than the total amount paid in. The eldest one is invested in a much more risky fund and is barely worth the total amount paid in.
I think I could have outperformed them both by sticking the money in a normal savings account.
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