Heard about the Child Trust Fund? surprisingly few seem to be aware of the fact that all babies are given a free £250 voucher from the government to put 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 thatswaps 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 approved provider of the Child Trust Fund The State is eager for the public to have access to Stakeholder accounts and this is the kind of account that we supply. This means that:
Investments go into Scottish Friendly’s Managed Growth Fund, which intends to provide good growth potential
An investment is made partly 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 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 law
It’s affordable - additional payments can be put 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the Fund to a top limit of £1,200 per year to help increase the child’s Fund (once added, this money is not able to be withdrawn).
In a nutshell our Stakeholder account provides 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. Nonetheless this doesn’t 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 placed) can go down as well as rise and would not be guaranteed.
Only infants who were born on or after 1st September 2002 are allowed to open a Child Trust Fund. If you have children born before the 1st of September 2002 who are not entitled 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 investing for a child.your children is a sound means of preparing for the future.
