The Future of Your Child, where to Invest the Two Hundred and Fifty Pounds
Are you aware of the Child Trust Fund and its benefits? a small amount seem to have heard of the fact that all newborn children get a free £250 voucher from the government to invest in a Child Trust Fund. The child’s voucher can be invested in any one of three types of CTF account, Stakeholder – a shares-based account thatswitches into cash, a savings account or a shares account. It is an excellent way to invest for the future requirements of a young person
Scottish Friendly is an authorised provider of the Child Trust Fund The State is keen for the public to have access to Stakeholder accounts and this is the sort of account that we are catering for. This means that:
Investments are placed into our Managed Growth Fund, which hopes to provide good growth potential
It invests 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 increase whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of just 1.5 percent annually
When a person reaches the age of 18 the child will receive a lump sum, totally free of Capital Gains and Income Tax under current legislation
It is affordable – additional 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to the Fund to a maximum of £1,200 per year to help augment the child’s Fund (once added, this money is not able to be withdrawn).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’s also the additional assurance that our account complies with the Government’s stakeholder criteria. Nevertheless 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 held) can decrease as well as rise and would not be guaranteed.
Only children whose birthday is on or after 1st September 2002 are allowed to open a Child Trust Fund. If you have older children born before the above-mentioned date 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 undoubtedly the case that investing for your daughter is a sensible means of preparing for tomorrow.
