Children born between September 2002 and the start of 2011 were eligible for a Child Trust Fund (CTF), kick-started with a voucher for at least £50 form the government. CTFs were phased out and replaced by the Junior ISA in 2011. Today, the value of many CTFs will be modest – the original voucher value plus any growth or interest – whilst others will be more significant had parents, grandparents or guardians taken the opportunity to top them up.
At the age of 16 children with a CTF can assume some control over their investments – guardianship that lasts until their 18th birthday when, as ‘official owners’, they can decide what to do with the money. September 2020 will be when the first batch of CTFs mature for those reaching 18, and the government hasn’t yet announced what will happen – they may well roll over into an ISA or just sit as cash.
For any 18-year-old a financial windfall is welcome, and, in most cases, the initial reaction will be to spend, spend, spend. We recognise that to most 18-year-olds a house deposit, wedding costs or – even more outlandishly – a retirement pot are goals that seem a lifetime away. They practically are! Take a step back though and we firmly believe that it’s better to prioritise long-term goals over a short-term retail fix.