Julian Knight: Hooray for junior ISAs, but they won't help cash in moribund Child Trust Funds
Sunday 24 July 2011
1.01 per cent – that is the average amount a children's savings account is paying, according to Which?.
And child trust funds, much heralded as the long-term savings vehicle for hundreds of thousands of British kids, are also paying a pitiful 1.1 per cent on average, about 4 per cent below the rate of inflation.
CTFs are now closed to new money – since being abolished by the coalition – so you can bet that the rates these accounts will pay will fall further. It's one of the unwritten laws of personal finance that once an account closes to new money, it becomes an instant rate backwater. Suffer the little children indeed.
From November there will be a new option – the junior individual savings account. In essence, this is an extension of the ISA system, allowing children and their parents to shelter savings from the taxman. The details of the junior ISA are likely to be announced this week by Mark Hoban, Financial Secretary to the Treasury, and this could include a raising of the proposed limit that can be saved each year from £3,000 to somewhere around £3,600.
This is likely to become a very competitive area very fast, as the three magic letters ISA is likely to guarantee public goodwill. But if you want to transfer money from a CTF, then you're set to be disappointed, as under present plans such a move is banned – which seems very strange because with junior ISAs, like CTFs, the cash is locked away until adulthood. Banning transfers is likely to condemn accountholders to years of seeing part of their nest egg underperform.
What would a 'north euro' mean for you?
The euro's demise is still off the table as far as the eurozone ruling class is concerned, and much of the talk is of closer integration – in effect ending a state's ability to spend as it chooses. Such a choice combined with a new euro bond would probably do the trick, but will the populations stand for it? Only a minority are in favour of a United States of Europe and this crisis is seeing their number dwindle.
Another option is the break-up of the euro – not into 17 different currencies but into a north euro and the rest (the so-called Club Med countries). What would this mean for you as a British saver and investor?
Well, once the dust settled, a north euro would rise against the pound. Since the crunch, the euro, pound and dollar have been competing in a bizarre beauty contest – all are mangy dogs but which one has fewer fleas? A euro without Club Med will receive an instant delousing.
For investors with money in, say, Germany or France, returns will get an immediate lift. Savers may be helped by money naturally flowing to the north euro, which will mean interest rates will have to rise here to attract the capital we need. Savings rates would go up, but borrowers on flexible-rate mortgages will find their repayments rising.
A north euro could be good for savers and poor for borrowers, but this doesn't account for the likely fall-out from European and UK banks realising that loans made to Club Med aren't going to be paid back anytime soon. And it's that part of the equation which is frightening, echoing the collapse of Lehman.
Independent Partners: See how much you could save by switching credit cards. Compare now
peopleContenders for Time magazine's Person of the Year are a mixture of the good, the bad and the holy
newsAs the world remembers Mandela the hero, the prison where he spent 27 years seems all the more brutal
tvSteven Moffat reveals the actor was dying to take on the role of the Time Lord and says he is excited to see what he will do with the character
sportBayern Munich 2 Manchester City 3: City come from two down to beat reigning European Champions
arts + ents... and a chance to paint Booker Prize winning author Hilary Mantel
danceUnder Tamara Rojo's inspired direction, it seems possible that it could challenge the dominance of the Royal Ballet. We meet some established names and rising stars
travelDiscover Uruguay's jet-set beach resort, an Atlantic enclave with plenty of art and culture to explore on the side
- 1 Mountain goats' miraculous escape from avalanche captured in dramatic video footage
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 Sir Ian McKellen hits back at Damian Lewis' 'fruity actor' claims
- 4 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 5 Selfie at funeral: Cameron squeezes in on Obama snap at Mandela memorial
- < Previous
- Next >
iJobs Money & Business
£50000 - £65000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...
£60000 - £85000 per annum + BONUS + BENEFITS: Harrington Starr: A leading asse...
£45000 - £70000 per annum + Bonus + Benefits: Harrington Starr: Technical Impl...
£65000 - £90000 per annum + Bonus + Benefits: Harrington Starr: Rogue Trading ...
Day In a Page
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000