£20 top-ups will help build a £6k piggy bank
SARAH DOWZELL wants to step up for her ten-year-old son Zac who currently has £2,500 in an HSBC stakeholder child trust fund.
She says: ‘I stopped paying into it four years ago but we’ve recently cancelled our Sky TV package so it seems sensible to divert this to saving for Zac and my other son Finn. I’d also like to encourage them to save part of their birthday cash.’
Adding an extra £20 a month, and encouraging Zac to pay in £40 a year, would see the pot grow to £6,403, according to financial adviser Justin Modray.
The fund currently charges a 0.45 pc annual fee. If Sarah keeps Zac’s child trust fund where it is and does not make any more contributions, after seven-and-ahalf years his £2,500 pot could be worth £3,748, allowing for 6 pc investment growth.
But if she transfers the fund to a Junior Isa costing 0.41pc in annual fees it would be worth just £22 more at £3,770.
Mr Modray says: ‘Staying put is not a bad option. The HSBC child trust fund is relatively low cost compared to the wider market, even including Junior Isas. But child trust funds offer a small choice of investments.’