My Quarter-of-a-Million Child Trust Fund
I've just started a child trust fund for my one-year-old son Christopher. If you're thinking about doing the same for your child, you can put in around £1,200 a year; Gordon Brown has put in £250.
It's not much is it? But thanks to self-select funds available from most stockbrokers, I am hoping to make £250,000 for my son. Sounds crazy? From £1,200 a year? Maybe, but my view is the amount of money you can put in is so small that why not go high risk - at least for the first few years.
I'm going to try and double the money every year. And if it doesn't happen, I can be more conservative in later years as there's a whole 18 years of investing to come. I'm not going to put it in really idiotic penny shares. In fact I'm looking at recovery plays where I can pick up 15 to 20 per cent reasonably quickly and get the hell out if I'm wrong.
So Northern Recruitment is Christopher's first share at 115p - and I'm off to a flyer because, as I write, the shares are now 140p and I'm hoping for 150p to 170p. He's already earned a dividend! I shall keep you all up to date from time to time in future columns and let you know how I get on.
Can I really get it to £250,000? Or is Christopher going to end up with next to nothing? I think if you're reading this and dabble in the markets it really is worth setting up a self-select child trust fund. Mine is with Squaregain.
In fact, considering you (or relatives) can only put in very small amounts, it's possible to use your child trust fund perhaps as practice. Your son or daughter cannot get their hands on the money until they're 18-years-old. You can buy and sell shares just like in a normal account.
I wonder though by the time he reaches that age how much £250,000 will buy him. Probably just a garage in Peckham!
The markets continue to look strong but as the FTSE approaches 6,000 you have to wonder whether it's time to start banking profits. Will shares start to sell off once 6,000 is reached? Or are we in for a bumper year?
I feel a bit on the cautious side, although I think there is money to be made from the banking sector this year (Barclays is my favourite) where there may be bid fever, and also in telecoms when it would be surprising if there weren't a few bids, especially with Thus very firmly in the frame to be taken over.
Some more good gains for my portfolio: doing very well are Barclays, De La Rue, Investment Trust Pantheon and, in particular, the rather overlooked MTL Instruments which has been flying.
As the FTSE, I believe, will struggle near the 6,000 level I will also be thinking about shorting.