Altameroy Blog

Do you know what the Child Trust Fund is? a low number of parents seem to realise that all babies get a free £250 voucher from the State to place in a Child Trust Fund. This voucher can be invested in any one of three kinds of CTF account, Stakeholder - a shares-based account thatswitches 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 a licensed provider of the Child Trust Fund The State is eager for the public to have access to Stakeholder accounts and this is the type of account that we are catering for. This means that:

Investments are paid into Scottish Friendly’s Managed Growth Fund, which hopes to provide good growth potential

An investment is made partly in shares to get the benefit 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 comes with a low ‘Stakeholder’ funds charge of only 1.5 percent yearly

At age 18 the child will get a lump sum, entirely free of Capital Gains and Income Tax under current legislation

It’s affordable - extra payments can be placed 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 - if they want can give to the Fund to a ceiling of £1,200 per year to help increase the child’s Fund (once added, this money is not allowed to be withdrawn).

What this means is that our Stakeholder account offers a good balance between potentially high returns and a reduced level of risk. There’s 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 suitable for everyone. Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is held) can fall as well as increase and would not be guaranteed.

Only infants whose birthday is on or after 1st September 2002 are eligible to start up a Child Trust Fund. If you have older children born before the above-mentioned date who are not entitled you could consider 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 investing for your daughter is a rewarding means of preparing for tomorrow.