What the Child Trust Fund Can Do for Your Son or Daughter, How to Invest the Two Hundred and Fifty Pounds
Are you aware of the Child Trust Fund and its benefits? surprisingly few seem to realise that all new babies get a free £250 voucher from the government to put in a Child Trust Fund. The voucher may be invested in any one of three kinds of CTF account, Stakeholder – a shares-based account thatchanges into cash, a savings account or a shares account. It is a superb chance to prepare for the future requirements of a child
Scottish Friendly is an authorised provider of the Child Trust Fund The State is keen for people to have access to Stakeholder accounts and this is the type of account that we are providing. This means that:
Investments go into our Managed Growth Fund, which aims to provide strong growth potential
An investment is made partly in shares to take advantage of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
go down as well as rise whereas capital would be protected in a deposit account)
It is available with a low ‘Stakeholder’ funds charge of just 1.5 percent every year
When reaching 18 the young person will get a lump sum, wholly free of Capital Gains and Income Tax under current legislation
It is very affordable – extra payments can be put in the account from as little as £10
A particularly advantageous aspect of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – if they want can add to the Fund to a top limit of £1,200 per year to help increase the child’s Fund (once added, this money is not able to be withdrawn).
In a nutshell our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There is also the extra assurance that our account meets with the Government’s stakeholder criteria. However this does not mean that returns are guaranteed or that Stakeholder accounts are appropriate for everyone. Bear in mind that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is held) can fall as well as increase and would not be guaranteed.
Only infants who were born on or after 1st September 2002 are qualified to start up a Child Trust Fund. If you have children born before the 1st of September 2002 who are not qualified you could look at saving for them with a Child Bond – it’s a tax-free savings plan intended for long-term growth.
The fact is that investing for your son is a sensible means of preparing for the world to come.
