Do you know what the Child Trust Fund is? surprisingly few appear to have heard of the fact that all newly born babies are given a free £250 voucher from the State to put in a Child Trust Fund. Your son or daughter’s voucher may be invested in any one of three sorts 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 needs of a young person
Scottish Friendly is an authorised provider of the Child Trust Fund The State is eager for the general public to have access to Stakeholder accounts and this is the sort of account that we are offering. This means that:
Investments are deposited into Scottish Friendly’s Managed Growth Fund, which intends to provide good growth potential
An investment is made 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
fall as well as rise whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of only 1.5 percent yearly
When reaching 18 the child will get a lump sum, wholly free of Capital Gains and Income Tax under present law
It is affordable – extra payments can be put in the account from only £10
A major attraction of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – if they want can contribute to the Fund to an uppermost limit of £1,200 per year to help increase the child’s Fund (once added, this money cannot be withdrawn).
What this means is that our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There is also the extra assurance that our account complies 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 placed) can decrease as well as increase and is not guaranteed.
Only children who were 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 eligible you could consider investing 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 tomorrow.
