The Future of Your Son or Daughter, Choose the Right Way to Invest the Two Hundred and Fifty Pounds
Do you know what the Child Trust Fund is? a low number of parents seem to realise that all new babies receive a free £250 voucher from the State to place in a Child Trust Fund. This voucher may 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 an excellent way to prepare for the future requirements of a child
Scottish Friendly is an accredited provider of the Child Trust Fund The Government is keen for the general public to have access to Stakeholder accounts and this is the sort of account that we are supplying. 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 make the most of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
decrease as well as increase whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of only 1.5 percent every year
At age 18 the young person will receive a lump sum, completely free of Capital Gains and Income Tax under current legislation
It is very affordable – extra payments can be put in the account from only £10
An interesting feature of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – can add to the Fund to a ceiling of £1,200 per year to help augment the child’s Fund (once added, this money is not able to be withdrawn).
In a nutshell our Stakeholder account offers a good balance between potentially high returns and a reduced level of risk. There’s also the extra assurance that our account meets with the Government’s stakeholder criteria. Nevertheless this doesn’t 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 go up and would not be guaranteed.
Only infants born on or after 1st September 2002 are qualified to open a Child Trust Fund. If you have older children born before the above-mentioned date who are not qualified you could contemplate 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 your daughter is a rewarding means of preparing for the world to come.
