Melanie Bien: Let child trust funds play the field on investment
Sunday 30 May 2004
The Inland Revenue released more details last week about the child trust funds to be introduced in less than a year.
Changes to the draft regulations include "allowing a wider range of products to enter the CTF market". But is this the case? The Building Societies Association says the decision to allow providers to offer CTFs only if they already sell equity investments eliminates the many building societies which only offer savings products.
The Government argues that as CTF money will be invested for such a long time - 18 years - it should be in equities as these are likely to generate greater returns than savings accounts. And there's enough time to ride out the ups and downs of the market.
But any investment product should involve choice, particularly one that will be available to so many. And while equities do tend to produce greater returns than cash, not everyone will be happy investing in them.
If parents can't afford to contribute to their offspring's fund, is there any point choosing equities? The state's initial contribution - up to £500 - and a further payment when the child is seven will be eaten into by charges if the cash is invested in equities. A savings account paying a good rate of interest, with no charges, may be a more sensible alternative.
In an ideal world, all parents would invest their child's trust fund allowance in a broad range of equities, regularly adding their own money over the years. So by the age of 18, the child would have access to a sizeable sum to pay for university, buy a car or travel round the world.
But not all 18-year-olds will find themselves in this enviable position; to assume they will is shortsighted.
Trouble in store
Store cards are the latest financial product to attract the attention of the Office of Fair Trading (OFT). And with interest rates likely to rise further this year, the OFT's campaign warning consumers to check terms and conditions before they sign up for a store card is timely.
With typical annual percentage rates (APRs) nudging the 30 per cent mark, store cards should not be taken out lightly. Yet that's exactly what tends to happen, primarily because of the way in which they are sold.
We should check the conditions before we sign up for one, just as we should with any other financial product. But if you've ever been offered a store card, you will know just how difficult this can be.
While shopping last week, I was asked whether I wanted to save 10 per cent on my purchase - a common approach from sales assistants flogging store cards. I declined. But if I had accepted and started filling out a form, it is likely that before long I'd have felt harassed, with a queue of 10 people forming behind me during a busy lunch hour.
The last thing you feel like doing in such a situation is quizzing the sales assistant about late-payment charges and whether payment protection insurance is optional. And it is unlikely the sales assistant would be able to give informed answers.
Handled sensibly, a store card isn't necessarily a bad thing. The initial 10 per cent discount could save you a lot if you are making a substantial purchase that day. And you may get perks, such as further discounts or invitations to exclusive events.
But handled sensibly means clearing the balance at the end of the month. If you don't do this, any initial discount will be swallowed up many times over.
The OFT reveals that 30 per cent of adults have a store card, with 60 per cent of these clearing the balance each month. This is the smart way to use a store card. But the other 40 per cent of cardholders are stung by extortionate rates of interest.
Furthermore, 10 per cent don't have any other form of credit. So they aren't taking advantage of 0 per cent introductory rates on credit cards or cheap personal loans. And given that the standard APR on a credit card hovers around the 10 per cent mark, even when the introductory period has ended you won't be fleeced to the extent that you are with a store card.
Clearly, some educational work is long overdue. For more information, get hold of a copy of the OFT's leaflet, "Are you store card smart?", at www.oft.gov.uk.
The 'no-hang up' scam targets vulnerable people - and your bank may not protect you
Budget 2015: George Osborne is set to get tough with further cuts in public spending
Bargain Hunter: Our exclusive deal cuts the cost of buying foreign currency by 20 per cent
Five Questions On: GB Energy's new tariff
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 Humans of New York image of crying gay teen receives best response from Ellen DeGeneres
- 2 People all over the world are getting semicolon tattoos to draw attention to mental health
- 3 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 4 The biggest first date turnoff has been revealed
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
Day In a Page
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.