Did you know that newborn children get a free £250 voucher from the the State to deposit in a Child Trust Fund. The money can be invested in any one of three sorts of CTF account, Stakeholder - a shares-based account that changes into cash, a savings account or a shares account.
Scottish Friendly is an authorised provider of the Child Trust Fund. The Government is keen for the public to have access to Stakeholder accounts and this is the type of account that we offer. This means that:
• Investments are saved into our Managed Growth Fund, which aims to provide good growth potential.
• It invests in part in shares to take advantage of potentially higher returns over 18 years, compared to a cash deposit account (although the value of shares can fall 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% per year
• When attaining the age of 18 the young person will receive a lump sum, totally free of Capital Gains and Income Tax under present law.
• It’s affordable - additional payments can be placed from as little as £10
Anyone - parents, grandparents, aunts and uncles, friends - can add to the Child Trust Fund to increase it to a maximum of £1,200 per year (once added, that money cannot be withdrawn). All this means that our Stakeholder account provides a good balance between possible high returns and a reduced level of risk. There is also the extra assurance that our account is in accordance with the Government’s stakeholder criteria. Nevertheless this doesn’t mean that returns are guaranteed or that Stakeholder accounts are for everyone. Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can go up as well as go down and is not guaranteed.
Only children whose birthday is on or after 1st September 2002 are entitled to start up a Child Trust Fund. If you have older kids who are not qualified you could look at investing for them with a Child Bond - it’s a tax-free savings plan for long-term growth.
