The children of parents who are not taking up the offer of Child Trust Funds (CTFs) are losing out on almost £7,000, a new survey claims.
Price comparison website Moneysupermarket conducted a study that showed CTFs offer much better returns for 18-year investments than child savings accounts do.
It showed that an initial investment in a CTF of £250, followed by £100 over 18 years has a return of up to £6,684 more than the best child savings account that is available today.
Savings accounts director at Moneysupermarket, Stuart Glendinning said CTF cash-based savings accounts have competitive AERs.
Acknowledging that CTFs do pose some problems, he said they generally have the leading edge over children's savings accounts.
The biggest problems with CTFs are that funds are not accessible until the child's 18th birthday, and that the CTF has a maximum investment cap of £1,200 annually.
He said that parents are however guilty of looking a gift horse in the mouth by failing to invest their CTF vouchers.
"As the £250 comes for 'free' this opportunity should not be wasted and at the very least a parent should open a CTF account, at least for this sum," he concluded.
So far, less than a third of parents who are eligible have opened accounts with CTF vouchers, according to government figures.
An estimated 1.25 million vouchers across Britain have still not been used.
Parents urged to take up CTFs
Parents urged to take up CTFs
Tue, 07 Jun 2005
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