11.27.08
What the Child Trust Fund Can Do for Your Child, where to Invest the 250 Pounds
Are you aware of the Child Trust Fund and its benefits? remarkably few appear to know about the fact that all newborn children are given a free £250 voucher from the government to place in a Child Trust Fund. The voucher can be invested in any one of three types of CTF account, Stakeholder - a shares-based account thatswaps into cash, a savings account or a shares account. It is a great opportunity to invest for the future needs of a youngster
Scottish Friendly is a licensed provider of the Child Trust Fund The Government is eager for the public at large to have access to Stakeholder accounts and this is the sort of account that we provide. This means that:
Investments are sent into Scottish Friendly’s Managed Growth Fund, which seeks to provide good growth potential
An investment is made partly 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 go up whereas capital would be protected in a deposit account)
It is available with a low ‘Stakeholder’ funds charge of only 1.5 percent perannum
At age 18 the child 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 only £10
One of the highlights of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - may give to the Fund to an uppermost limit of £1,200 per year to help augment the child’s Fund (once added, this money is not able to be withdrawn).
All this means 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 is in accordance with with the Government’s stakeholder criteria. Nonetheless 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 go down as well as increase and is not guaranteed.
Only children whose birthday is on or after 1st September 2002 are qualified to open a Child Trust Fund. If you have older kids born before the 1st of September 2002 who are not qualified you could consider 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 your daughter is a sound means of preparing for the world to come.
