The Future of Your Child, How to Invest the 250 Pounds
Are you aware of the Child Trust Fund and its benefits? Not many UK parents seem to know about 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 may be invested in any one of three sorts of CTF account, Stakeholder – a shares-based account thatchanges into cash, a savings account or a shares account. It is a superb chance to save for the future requirements of a young person
Scottish Friendly is an accredited provider of the Child Trust Fund The Government is eager for people to have access to Stakeholder accounts and this is the type of account that we supply. This means that:
Investments are saved into Scottish Friendly’s Managed Growth Fund, which aims to provide strong growth potential
An investment is made partly in shares to get the benefit of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
go down as well as increase 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, completely free of Capital Gains and Income Tax under prevailing law
It’s affordable – additional payments can be put in the account from as little as £10
A particularly advantageous aspect of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – if they want can add to the Fund to a top limit of £1,200 per year to help augment the child’s Fund (once added, this money cannot be withdrawn).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 reduced level of risk. There is also the additional assurance that our account meets 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 infants whose birthday is 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 eligible you could look at saving for them with a Child Bond – it’s a tax-free savings plan intended for long-term growth.
There can be no doubt that saving for a child.your children is a sensible means of preparing for tomorrow.
