Weekend reading: Child Trust Funds coming of age

What caught my eye this week.

Time flies. Great if you’re compounding interest. Less so if you’re contemplating a receding hairline.

As I’ve remained determinedly childless, I’ve not had to suffer the ignominy of seeing my own offspring grow up faster than you can say: “No I won’t pick you up from the bloody nightclub at 2am”.

Sure, I get the odd shiver of recognition – the close friends’ eldest who just got into his preferred university, an early girlfriend who appears on Facebook with what seems to be a time-traveling clone but turns out to be her daughter.

But mostly, I can delude myself that I’m perpetually playing about in my early 30s in peace.

However this week a messenger of mortality got through my defenses in the form of a press release stating that the first children to get Child Trust Funds will be 16 in September.

There now begins a period of 11 years during which the estimated six million children who benefited from these largely Government-funded accounts begin to see what they’ve won.

At 16, a child can take control of their account. At 18, they can access their money.

Ladies and gentleman, place your bets!

The Lost Boys and Gone Away Girls

While a lucky handful of Child Trust Fund owners have Monevator readers for parents and will have benefited both from good stewardship of their money to-date and perhaps further family contributions, most kids are not so lucky.

Indeed of the more than six-million accounts opened, 1.74 million were opened by HMRC within a year of the birth of a child, because their parents hadn’t done so.

Worse, 34% of these accounts are now marked ‘Addressee Gone Away’.

The Share Foundation charity says this amounts to £0.75 billion stranded in 440,000 lost accounts, the vast majority of which are notionally owned by likely economically disadvantaged – and now lost to the system – children. The charity has made proposals to the Government as to how it can address this situation in the November budget.

I liked the universal Child Trust Fund scheme, despite problems like these. It was progressive, with everyone getting at least a taste of the life of a saver. If Child Trust Funds had become a permanent feature of the savings landscape, they might have taught  a few thousand more children the value of saving. Of course, like all universal benefits it was a bung to the better-off, but that’s easily fixed with taxation. (I’d prefer my tax contribution went on teaching kids patience rather than paying for a middle-class family’s mini-break, which universal child benefit once did for some of the well-to-do).

Alas Child Trust Funds were chopped, changed, dropped. And while many Monevator readers – and most of my friends – put money into JISAs and even open pensions for their loved and lucky children, the Government top-ups for everyone stopped in 2011.

Do you know someone who might have forgotten their child has a tiny Trust Fund tucked away somewhere? Could be worth prodding them.

From Monevator

How to get a 14% return from RateSetter – Monevator

From the archive-ator: Income units versus accumulation units – what difference does it make? – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!¹

Government’s ‘care Isa’ plan dismissed by Tory health committee chair  – Guardian

Buy-to-let will decline for another three years, says report – ThisIsMoney

Nearly half of tenants who make complaint face ‘revenge eviction’ – Guardian

Property asking prices slump £7k in a month – ThisIsMoney

After the Bitcoin boom: Hard lessons for cryptocurrency investors – New York Times

Half of Britain’s bank branches will be ‘closed within five years’ warns former Barclays boss – ThisIsMoney

Investors set to benefit from global dividend haul [Search result] – FT

Products and services

Investors with failed broker Beaufort get a lifeline to keep their money safe – ThisIsMoney

Monzo plans to crowdfund £20m as it chases coveted £1bn ‘unicorn’ status – City AM

The cunning new tactic crooks are using to raid your bank account – ThisIsMoney

Look, no beard: Goldman Sachs’ Marcus subverts the fintech story – Guardian

Testy testosterone? Get 50% off your first Thriva blood work with this affiliate link – Thriva

Top income-earning investments trusts – ThisIsMoney

How can two vastly different sized pension pots have the same transfer value? – ThisIsMoney

Comment and opinion

When cash was king – Young FI Guy

Zero-fee investing won’t make you a successful investor [Canadian but relevant] – Canadian Couch Potato

Swedroe: Manager skill exists, but not enough to cover costs – ETF.com

EIS investing: From algae to tiny spacecraft — the world of wacky investments [Search result] – FT

Invoking Adam Smith to justify active management is scraping the barrel – T.E.B.I.

Buying emerging markets during a disaster – A Wealth of Common Sense

The Strangely deep-value story at the heart of the Marvel empire – The Value Perspective

Tench detecting – SexHealthMoneyDeath

Change is difficult – Abnormal Returns

Early retirement doesn’t have to suck – Physician on FIRE

Fake news, investor attention, and market reaction [Research] – SSRN

Kindle book bargains

Making a Success of Brexit and Reforming the EU by Roger Bootle – £0.99 on Kindle

Zero to One: Notes on Start Ups, or How to Build the Future by Peter Thiel – £1.99 on Kindle

Liar’s Poker: From the author of the Big Short by Michael Lewis – £0.99 on Kindle

Nudge: Improving Decisions About Health, Wealth and Happiness by Richard Thaler – £1.99 on Kindle

Brexit

Pick your own Brexit [Interactive game] – Bloomberg

What the Government’s no-deal Brexit papers say about money and pensions – BBC

Hammond puts the no-deal Brexit bill at £80bn [PDF letter] – UK Government

WTO warns on disruption to UK of no-deal Brexit [Search result] – FT

From Catiline to Boris: The Roman lessons for Brexit Britain – Prospect

October no longer hard deadline for deal, hints Cabinet Office minister – Guardian

BLT will survive no-deal Brexit – but it is likely to cost you more – Guardian

Off our beat

The undertakers of Silicon Valley: how failure became big business – Guardian

Beware of bosses handing out crap sandwiches – Slate

Online shopping and cheap prices are turning Americans into hoarders – The Atlantic

Modern dating, the end of civilization, and so forth – via Twitter

Museum visitor falls into hole in the floor that looks like a cartoon-ish painting of a hole in the floor – Gizmodo

And finally…

“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard. I always pose it this way. I say: ‘Lookit. Would you rather be the world’s greatest lover, but have everyone think you’re the world’s worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the world’s greatest lover?’ Now, that’s an interesting question.”
– Warren Buffett, The Snowball

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from Monevator http://monevator.com/weekend-reading-child-trust-funds-coming-of-age/