Nation celebrates as first Child Trust Fund youngsters turn five

September 1 marks the fifth birthday of the first Child Trust Fund (CTF) babies, and it isn’t just the youngsters who should be celebrating, says David White, chief executive of The Children’s Mutual.

Nearly three million CTF accounts have now been opened and parents and society should be celebrating the fact that the CTF is clearly embedded in the nation’s psyche and is changing savings habits.

“Our figures show that 43 per cent of our customers are contributing an average of £24 a month into their child’s CTF account and if they continued that could give their child a lump sum of £9750 in 18 years’ time.

“Life with children is a costly enterprise, and having a financial helping hand into adulthood is becoming more and more important. The key to the success of the CTF is topping up but it isn’t just parents who can help – anyone can save into a CTF. If both sets of grandparents matched the £24 per month top up, the lump sum available at 18 could increase to £27,070.”

Another cause for celebration is that parents are doing the sensible thing with their money, with nearly four in five families opting for share-based CTF accounts (either Stakeholder or Non-Stakeholder).

“Although the value of shares can go up and down, historically they have outperformed cash over the long term and we are keen that parents understand this when making their investment decision. The CTF provides a unique opportunity in that it allows parents to invest even small amounts in stocks and shares. For example, the minimum investment in stakeholder CTF can be as little as £10,” Mr White said.