What the Child Trust Fund Can Do for Your Son or Daughter,where to Invest the 250 Poundschild Trust Fund Voucher,Invest Your Free Child Trust Fund Voucher with Scottish Friendly,Investing in a Child Trust Fund Builds a Sound Financial Foundation for Yours
11/02/2009 9:19
on: Finance Tips
Have you heard the news about the Child Trust Fund?Not many UK parents surprisingly
sparse number of parents appear to realise that all newly born babies are given a free £250 voucher from the government to place in a Child Trust Fund. The child’s vouchercan be invested in any one of threesorts of CTF account, Stakeholder - a shares-based account that switchesinto cash, a savings account or a shares account. It is a superb chance to invest needs of a young person
Scottish Friendly is an authorised provider of the Child Trust Fund Voucher. The Government is eager 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 intends to provide good growth potential
• An investment is made 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 cango 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% per year
• At age 18 the child will receive a lump sum, totally free of Capital Gains and Income Tax under prevailing legislation
• It is affordable - additional payments can be put in the account from as little as £10
A key feature of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - if they want can give to the Fund to a top limit of £1,200 per year to help augment the child’s Fund (once added, this money is not allowed to be withdrawn).
In a nutshell our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There is also the additional assurance that our account is in accordance with with the Government’s stakeholder criteria. Nevertheless this doesn’t mean that returns are guaranteed 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 placed) can decrease as well as increase and isn’t guaranteed.
Only infants whose birthday is on or after 1st September 2002 are entitled to start up a Child Trust Fund. If you have older kids who are not entitled you could think about saving 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 children is a sensible means of preparing for the future.
