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September has arrived, and as the new term rolls around, for some this will mean a new stage of education. However, this month also marks an important date for some teenagers – and this comes in financial form.
As such, it means some children don’t know there are accounts in their name.
Consequently, they may be unaware the money is waiting for them.
HMRC says around 55,000 accounts will mature each month, as the child turns 18.
More than 700,000 accounts – originally set up for children born between September 1, 2002 and January 2, 2011 – will now mature each year.
For those who aren’t sure where their CTF account is, there is an online tool which has been created by HMRC.
As well as the account holder, parents or guardians can use this service.
It’s understood that the average CTF will be worth more than £1,000, although many accounts may well hold significantly more than that.
Martin Shaw, CEO of the Association of Financial Mutuals, has shared some expertise to those turning 18 – as well as to those whose child or grandchild may be.
1. Find your CTF provider
“CTF providers are sending out statements just before your eighteenth birthday, showing how much the fund is worth and what to do next,” he explained.
“If you haven’t received a statement, you should check who currently holds the money as the provider may not have your latest address.
“HMRC has developed a handy online CTF tracker to help people who don’t know who currently holds their money.”
2. Don’t panic or make rash decisions
“There is no need to rush into a decision on what to do with your money, as the money will be held for you in a protected fund until you have decided.
“Talk to a trusted adult or someone you know who is good with money before deciding whether to cash in or re-invest the money.
“And remember, while the original voucher to open the CTF came from the government – parents or grandparents may have topped up the CTF over the years, and will have a view on what to use the money for, so it’s worth getting their input.
“The current CTF provider or a financial adviser can also help.”
3. Don’t leave the money in a bank account
“If you want to cash the money in, you will need a bank account to transfer it to.
“With interest rates at record low levels, holding money aside in a bank account for any amount of time though may not be a good idea,” said Mr Shaw.
4. Set financial goals
“If you want to keep the money invested, think about how long for, what you are saving for (such as a house deposit, driving lessons, a student loan, etc) and whether you want to invest extra money over time.
“Unity Mutual found that reinvesting in an ISA or into stocks and shares, house deposits or savings accounts were some of the most popular options among the current generation of teens.”
5. Set a limit
“If you want to spend some of the money, set a limit and stick to it.
“Then make a plan on what you do with the rest, so there’s not the temptation to keep spending it.”
6. Think about using the money to invest in your future
“You are the lucky group who will benefit from a lump sum that could make a significant difference to your life.
“I would urge any young person to think about their future plans and think about reinvesting the money in an adult ISA so that the money can grow further.
“Another option is to think about investing in yourself, such as university or a training qualification, as this will be paid back in the future.”