The Future of Your Child, How to Invest the Two Hundred and Fifty Pounds
Are you aware of the Child Trust Fund and its benefits? remarkably few seem to have heard of the fact that all newborn children get a free £250 voucher from the State to invest in a Child Trust Fund. The child’s voucher can be invested in any one of three kinds of CTF account, Stakeholder – a shares-based account thatchanges into cash, a savings account or a shares account. It is a great opportunity to prepare for the future requirements of a child
Scottish Friendly is an authorised 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 form of account that we provide. This means that:
Investments are deposited into Scottish Friendly’s Managed Growth Fund, which intends 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
fall as well as rise whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of just 1.5 percent annually
When reaching 18 the child will receive a lump sum, completely free of Capital Gains and Income Tax under prevailing legislation
It’s affordable – additional payments can be placed in the account from only £10
A particularly advantageous aspect of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – may contribute to the Fund to an uppermost limit of £1,200 per year to help increase the child’s Fund (once added, this money may not be withdrawn).
All this means our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There’s also the extra assurance that our account is in accordance with with the Government’s stakeholder criteria. However 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 children who were born on or after 1st September 2002 are eligible to start up a Child Trust Fund. If you have older kids born before the above-mentioned date who are not entitled you could contemplate investing for them with a Child Bond – it’s a tax-free savings plan which was created for long-term growth.
There can be no doubt that saving for your son is a sensible means of preparing for the world to come.
