Heard about the Child Trust Fund? Hardly any mothers or fathers seem to be aware of the fact that all infants 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 varieties of CTF account, Stakeholder - a shares-based account thatswaps into cash, a savings account or a shares account. It is an excellent way to save for the future requirements of a young person
Scottish Friendly is an approved provider of the Child Trust Fund The Government is eager for the general public to have access to Stakeholder accounts and this is the type of account that we are offering. This means that:
Investments are saved into our Managed Growth Fund, which seeks to provide strong growth potential
An investment is made 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
go down as well as go up 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 young person 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 as little as £10
One of the highlights of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - if they want can give to the Fund to a ceiling of £1,200 per year to help augment the child’s Fund (once added, this money may not be withdrawn).
What this means is that our Stakeholder account offers a good balance between possible high returns and a lower level of risk. There is also the extra assurance that our account complies with the Government’s stakeholder criteria. Nonetheless this does not mean that returns are assured 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 invested) can go down as well as increase and is not guaranteed.
Only children whose birthday is on or after 1st September 2002 are entitled to open a Child Trust Fund. If you have older kids born before the 1st of September 2002 who are not entitled you could contemplate saving for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth.
The fact is that saving for a child.your children is a rewarding means of preparing for the world to come.
