Do you know what the Child Trust Fund is? Few UK parents markedly
small number of parents seem to realise that all newly born babies receive a free £250 voucher from the government to invest. Your son or daughter’s vouchermay be invested in any one of threesorts of CTF account, Stakeholder - a shares-based account that swapsinto cash, a savings account or a shares account. It is a great opportunity to save life of a child
Scottish Friendly is an accredited provider of the Child Trust Fund Voucher. The Government is eager for the general public to have access to Stakeholder accounts and this is the type of account that we are supplying. This means that:
• Investments are placed into our Managed Growth Fund, which seeks to provide good growth potential
• An investment is made partly in shares to make the most of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares cango down as well as rise whereas capital would be protected in a deposit account)
• It is available with a low ‘Stakeholder’ funds charge of only 1.5% per year
• When attaining the age of 18 the young person will receive a lump sum, completely free of Capital Gains and Income Tax under present legislation
• It is very affordable - additional payments can be put in the account from as little as £10
An interesting feature of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - can contribute to the Fund to a top limit of £1,200 per year to help augment the child’s Fund (once added, this money is not able to be withdrawn).
What this means is that our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There’s also the extra assurance that our account meets with the Government’s stakeholder criteria. Nevertheless this doesn’t mean that returns are guaranteed or that Stakeholder accounts are suitable for everyone. Bear in mind that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is held) can decrease as well as rise and is not guaranteed.
Only infants born on or after 1st September 2002 are permitted to start up a Child Trust Fund. If you have children born before the {1st of September 2002 who are not eligible you could consider saving for them with a Child Bond - it’s a tax-free savings plan aiming for long-term growth. There can be no doubt that investing for a child is a rewarding means of preparing for the future.
