What the Child Trust Fund Can Do for Your Son or Daughter, Choose the Right Way to Invest the Two Hundred and Fifty Pounds
Are you aware of the Child Trust Fund and its benefits? Few UK parents seem to have heard of the fact that all newborn children receive a free £250 voucher from the government to place in a Child Trust Fund. The child’s voucher may be invested in any one of three kinds of CTF account, Stakeholder – a shares-based account thatswitches into cash, a savings account or a shares account. It is a great opportunity to prepare for the future needs of a young person
Scottish Friendly is an authorised provider of the Child Trust Fund The State is keen for the public at large to have access to Stakeholder accounts and this is the sort of account that we are supplying. This means that:
Investments are saved into our Managed Growth Fund, which intends to provide strong 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
fall as well as increase whereas capital would be protected in a deposit account)
It is available with a low ‘Stakeholder’ funds charge of only 1.5 percent perannum
When a person reaches the age of 18 the child will receive a lump sum, totally free of Capital Gains and Income Tax under present law
It is affordable – additional 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 – if they want can give to the Fund to a maximum of £1,200 per year to help boost the child’s Fund (once added, this money cannot be withdrawn).
Put succinctly our Stakeholder account offers a good balance between potentially high returns and a reduced level of risk. There’s also the additional assurance that our account is in accordance with with the Government’s stakeholder criteria. Nevertheless this doesn’t 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 held) can decrease as well as go up and is not guaranteed.
Only infants born on or after 1st September 2002 are authorised to open a Child Trust Fund. If you have older children born before the above-mentioned date who are not qualified you could consider saving for them with a Child Bond – it’s a tax-free savings plan intended for long-term growth.
It is undoubtedly the case that saving for a child.your children is a rewarding means of preparing for tomorrow.
