What the Child Trust Fund Can Do for Your Son or Daughter, where to Invest the 250 Pounds
Heard about the Child Trust Fund? Few UK parents appear to know about the fact that all newborn children receive a free £250 voucher from the State to place in a Child Trust Fund. The child’s voucher can be invested in any one of three types of CTF account, Stakeholder - a shares-based account thatswaps into cash, a savings account or a shares account. It is an excellent way to prepare for the future needs of a youngster
Scottish Friendly is an authorised provider of the Child Trust Fund The Government is eager for the public to have access to Stakeholder accounts and this is the kind of account that we are offering. This means that:
Investments go into our Managed Growth Fund, which intends to provide good growth potential
It invests in part in shares to make the most of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
decrease 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 prevailing law
It is very affordable - additional payments can be placed in the account from as little as £10
One of the highlights of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - may give to the Fund to a ceiling of £1,200 per year to help boost the child’s Fund (once added, this money cannot be withdrawn).
What this means is that our Stakeholder account offers a good balance between potentially high returns and a lower level of risk. There is also the additional assurance that our account complies with the Government’s stakeholder criteria. Nevertheless this doesn’t 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 decrease as well as rise and would not be guaranteed.
Only children whose birthday is on or after 1st September 2002 are qualified to open a Child Trust Fund. If you have children born before the 1st of September 2002 who are not eligible 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 saving for your son is a sensible means of preparing for the world to come.
