Doing it for the kiddies

Dear Sleepless,

It makes auntie’s old bones tickle to see someone sucked in by such an obvious bribe. For the confused, the CTF is a savings and investment account started up with a government cash gift for all UK-resident children born after 1 September 2002.

First, let’s be clear: you must put the money into one of three CTF accounts. Investing in a savings account is the safe bet, but won’t yield much: according to fund management group F&C, if the CTF had been invented 18 years ago, that initial £250 would be worth a measly £652 today. You could also invest in shares (chosen for you by a government-approved financial adviser). F&C says £250 invested in the UK’s largest companies 18 years ago would be worth £1,427 today. Or you can choose a stakeholder account: the money is invested in shares until the child is 13, at which point some of it is moved to safer investments to guarantee summink remains by the time the kid’s 18.

The Co-operative Insurance Society has teamed up with the Children’s Mutual to offer the only ethical CTF at the mo. But while it excludes tobacco, weapons and nuclear companies, ethical giants like BP and GlaxoSmithKline still get your loot.

The government hopes you will add to the fund yourself, and stick everything on the stock market. Parents are allowed to invest up to £100 extra a month. That could net £45,000 by your daughter’s 18th birthday. But think about this: by the time today’s tots have graduated they are expected to be in debt by an average of £43,825. Surely that’s just a coincidence.