Invest your Child Trust Fund for the maximum growth

THIS month the first Child Trust Funds, brought in under the Labour Government in 2002, are set to mature and those turning 18 will finally get their hands on the cash their parents have been squirrelling away since they were born, along with the initial government deposits.

Child Trust Funds, awarded to every child born between September 1, 2002, and January 1, 2011, gave parents a head start saving for a child’s future, with the Government giving vouchers worth from £50 to £250, based on when a child was born.

There are around 6.3 million CTFs in the UK, with an average balance of £877, but data from savings and investment firm Unity Mutual found almost half of teenagers will be receiving more than £5,000 – and more than 25% will get over £20,000.

Analysis by the Share Centre shows that investing the £877 in shares could produce £1,125 after five years, compared to £922 in a cash savings account.

Andy Parsons, head of investments and product proposition at The Share Centre, said: “Many parents may be nervous about their children gaining access to the money. however, our research shows this generation is very cautious and risk-averse when it comes to managing their money.”

To help those gaining access to CTFs, Andy has these his tips: KEEP AS MUCH INVESTED AS

POSSIBLE – the longer you invest your money, the more opportunity it will have to grow. THINK ABOUT LONG-TERM GOALS – when we have money earmarked for a particular life goal, we are much less tempted to dip into it. STICK TO FAMILIAR TERRITORY – investing in areas you’re familiar with, such as a product you use or a sector you work in, can be a way to build confidence. DON’T BE SPOOKED IF INVESTMENTS FALL – they will inevitably go up and down in value. Should your portfolio take a hit it’s important to remain calm – avoid a kneejerk reaction. Instead, when you suspect an asset is under– performing, keep a close eye on it and make a call to sell after a period of consideration, rather than in response to a sudden drop.

Invest and watch your money grow