Heard about the Child Trust Fund? remarkably few seem to realise that all newborn children are given a free £250 voucher from the government to put in a Child Trust Fund. The voucher can be invested in any one of three types of CTF account, Stakeholder - a shares-based account thatswitches into cash, a savings account or a shares account. It is an excellent way to save for the future requirements of a infant
Scottish Friendly is an approved provider of the Child Trust Fund The Government is eager for the public at large to have access to Stakeholder accounts and this is the kind of account that we provide. This means that:
Investments are saved into Scottish Friendly’s Managed Growth Fund, which seeks to provide good growth potential
An investment is made in part in shares to get the benefit of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
decrease as well as increase whereas capital would be protected in a deposit account)
It is available with a low ‘Stakeholder’ funds charge of just 1.5 percent perannum
When a person reaches the age of 18 the young person will receive a lump sum, wholly free of Capital Gains and Income Tax under present legislation
It is affordable - extra payments can be placed in the account from only £10
One of the great attractions of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - can give to the Fund to a maximum of £1,200 per year to help boost the child’s Fund (once added, this money may not be withdrawn).
In a nutshell our Stakeholder account provides a good balance between potentially high returns and a reduced level of risk. There is also the extra assurance that our account meets with the Government’s stakeholder criteria. Nevertheless this does not mean that returns are assured 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 invested) can decrease as well as go up and is not guaranteed.
Only children whose birthday is on or after 1st September 2002 are allowed to open a Child Trust Fund. If you have children born before the above-mentioned date who are not entitled you could look at investing for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth.
The fact is that saving for your daughter is a sound means of preparing for the world to come.
