Heard about the Child Trust Fund? remarkably few appear to be aware of the fact that all new babies are given a free £250 voucher from the government to put in a Child Trust Fund. The voucher may be invested in any one of three varieties of CTF account, Stakeholder - a shares-based account thatswaps into cash, a savings account or a shares account. It is an excellent way to invest for the future requirements of a child
Scottish Friendly is an accredited provider of the Child Trust Fund The Government is keen for the public at large to have access to Stakeholder accounts and this is the type of account that we are supplying. This means that:
Investments are sent into Scottish Friendly’s Managed Growth Fund, which seeks to provide strong growth potential
An investment is made 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 increase whereas capital would be protected in a deposit account)
It is available with a low ‘Stakeholder’ funds charge of just 1.5 percent annually
When a person reaches the age of 18 the young person will get a lump sum, entirely free of Capital Gains and Income Tax under present legislation
It is very affordable - additional payments can be put in the account from only £10
A notable attraction of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - if they want can contribute to the Fund to a top limit of £1,200 per year to help boost the child’s Fund (once added, this money cannot be withdrawn).
All this means our Stakeholder account offers a good balance between potentially high returns and a reduced level of risk. There is also the extra assurance that our account complies with the Government’s stakeholder criteria. Nevertheless this does not mean that returns are assured 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 invested) can fall as well as go up and would not be guaranteed.
Only infants who were born on or after 1st September 2002 are qualified to open a Child Trust Fund. If you have children born before the above-mentioned date who are not qualified you could think about investing for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth.
It is undoubtedly the case that investing for your daughter is a sound means of preparing for tomorrow.
