Do you know what the Child Trust Fund is?Few UK parents surprisingly
insubstantial number of parents seem to know about the fact that all newborn children get a free £250 voucher from the government to place in a Child Trust Fund. The child’s vouchercan be invested in any one of threetypes of CTF account, Stakeholder - a shares-based account that swapsinto cash, a savings account or a shares account. It is a great opportunity to invest life of a youngster
Scottish Friendly is a designated provider of the Child Trust Fund Voucher. The Government is keen for the public at large to have access to Stakeholder accounts and this is the sort of account that we are providing. This means that:
• Investments are sent into our Managed Growth Fund, which hopes 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 cango down as well as go up whereas capital would be protected in a deposit account)
• It comes with a low ‘Stakeholder’ funds charge of only 1.5% per year
• At age 18 the young person will get a lump sum, totally free of Capital Gains and Income Tax under prevailing law
• It is very affordable - extra payments can be put in the account from as little as £10
A notable attraction of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - can add to the Fund to a top limit of £1,200 per year to help increase the child’s Fund (once added, this money may not be withdrawn).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’s also the additional assurance that our account is in accordance with with the Government’s stakeholder criteria. Nevertheless this does not mean that returns are guaranteed 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 invested) can go down as well as go up and isn’t guaranteed.
Only infants who were born on or after 1st September 2002 are permitted to open a Child Trust Fund. If you have older kids who are not entitled 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 evident that saving for a child is a sound means of preparing for the future.
