Are you aware of the Child Trust Fund and its benefits? Not many UK parents seem to realise that all newly born babies get a free £250 voucher from the government to place in a Child Trust Fund. This voucher may be invested in any one of three sorts of CTF account, Stakeholder - a shares-based account thatswitches into cash, a savings account or a shares account. It is an excellent way to prepare for the future needs of a young person
Scottish Friendly is an approved provider of the Child Trust Fund The State is keen for the public at large to have access to Stakeholder accounts and this is the sort of account that we are supplying. This means that:
Investments are saved into our Managed Growth Fund, which hopes to provide good growth potential
It invests in part in shares to take advantage of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
decrease as well as rise whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of only 1.5 percent yearly
At age 18 the young person will get a lump sum, totally free of Capital Gains and Income Tax under present legislation
It is very affordable - additional payments can be put in the account from only £10
One of the great attractions of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - may add to the Fund to an uppermost limit of £1,200 per year to help increase the child’s Fund (once added, this money is not able to be withdrawn).
What this means is that our Stakeholder account offers a good balance between possible 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. However this does not mean that returns are assured or that Stakeholder accounts are appropriate for everyone. Bear in mind that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can decrease as well as increase and is not guaranteed.
Only children born on or after 1st September 2002 are eligible to open a Child Trust Fund. If you have older children born before the 1st of September 2002 who are not entitled you could think about investing for them with a Child Bond - it’s a tax-free savings plan which was created for long-term growth.
The fact is that saving for a child.your children is a sensible means of preparing for tomorrow.
