Heard about the Child Trust Fund? Hardly any mothers or fathers appear to be aware of the fact that all babies receive a free £250 voucher from the State to invest 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 save for the future needs of a youngster
Scottish Friendly is an accredited 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 form of account that we are supplying. This means that:
Investments go into Scottish Friendly’s Managed Growth Fund, which hopes to provide strong growth potential
It invests 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
go down as well as go up whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of just 1.5 percent every year
When a person reaches the age of 18 the young person will get a lump sum, wholly free of Capital Gains and Income Tax under prevailing legislation
It is affordable - extra payments can be placed in the account from as little as £10
A key feature of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - can contribute to the Fund to a top limit of £1,200 per year to help increase the child’s Fund (once added, this money cannot be withdrawn).
Put succinctly our Stakeholder account provides a good balance between possible high returns and a lower level of risk. There’s also the extra assurance that our account meets with the Government’s stakeholder criteria. However this does not mean that returns are guaranteed or that Stakeholder accounts are appropriate for everyone. Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can fall as well as increase and is not guaranteed.
Only children who were born on or after 1st September 2002 are entitled to open a Child Trust Fund. If you have older children born before the 1st of September 2002 who are not qualified you could consider saving for them with a Child Bond - it’s a tax-free savings plan which was created for long-term growth.
The fact is that saving for a child.your children is a rewarding means of preparing for tomorrow.
