It can be difficult for young people to get started with saving, as ongoing living expenses sap much of the money they earn through work.
However, you may have already given them a strong head start by setting up a Child Trust Fund that is now ready for them to claim.
With 827,000 matured Child Trust Funds yet to be claimed, it is worth considering how best to help your children take advantage of this pot of money.
What is the value of a Child Trust Fund?
Since September 2020, almost 3 million matured Child Trust Funds have been claimed or transferred into an Individual Savings Account.
The remaining pots of money contain an average of £2,310, representing a significant step-up for a young saver’s strategy.
Child Trust Funds were set up for children born between 1 September 2002 and 2 January 2011 with an initial Government deposit of at least £250.
These tax-free accounts have accumulated wealth over time and now require careful planning to ensure that your children make the most of the investment.
How should Child Trust Funds be used?
While the impulse of some young people may be to go on a spending spree, the money in the Child Trust Fund could be invested into a more long-term savings strategy.
A safe option would be a Cash ISA, as this can allow money to grow through interest with minimal risk.
A Stocks and Shares ISA may be better suited to young people who are investing for the long term and are comfortable with the value of their investment rising and falling. Both can be topped up with additional funds within the £20,000 annual ISA allowance, although from April 2027 no more than £12,000 of this can go into a Cash ISA for savers under 65.
In the same way that mature savers benefit from financial guidance, our team can support your family in making effective decisions to grow wealth across generations.
If you or your family are struggling to locate a Child Trust Fund, you can use the GOV.UK locator tool, which asks for details including the account holder’s National Insurance number, to find out which provider holds it. The funds can then be claimed directly from that provider.
