The Child Trust Fund is soon upon us, and it will be a success according to research by Virgin into ...
The Child Trust Fund is soon upon us, and it will be a success according to research by Virgin into potential demand for the new product.
Nine in 10 parents surveyed said they would consider topping up their children's funds, compared to just 53% who said they already saved regularly for their children's futures.
The average sum parents say they will add is £38 per month, which Virgin says means a £1bn market is about to be created, with government funding of about £750m and parental contributions of about £280m.
Based on the £38 additional contribution, and a product with a 1% charge and growth of 7% annually for 18 years, the average CTF would provide a head start worth about £14,000, Virgin says.
However, it adds that the benefits of CTFs are about to be limited by the government's insistence on placing them within the Sandler suite, which would imply strict limits on acceptable investment risk.
That would limit the scope for investing in equities, and limit the potential for the funds to provide a better return over the long term.
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