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Are you aware of the Child Trust Fund and its benefits?A remarkably
low number of parents appear to appreciate that all newly born babies receive a free £250 voucher from the the State to put. Your son or daughter’s vouchermay 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 an excellent way to prepare needs of a young person
Scottish Friendly is an authorised provider of the Child Trust Fund Voucher. The State is eager for the general public to have access to Stakeholder accounts and this is the form of account that we offer. This means that:
• Investments are placed into our Managed Growth Fund, which intends to provide strong 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 candecrease as well as go up whereas capital would be protected in a deposit account)
• It is available with a low ‘Stakeholder’ funds charge of just 1.5% per year
• When attaining the age of 18 the young person will get a lump sum, wholly free of Capital Gains and Income Tax under prevailing law
• It is very affordable – extra payments can be placed in the account from as little as £10
One of the great attractions of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – if they want can contribute to the Fund to a maximum of £1,200 per year to help boost the child’s Fund (once added, this money is not allowed to be withdrawn).
All this means our Stakeholder account offers a good balance between potentially high returns and a lower 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 placed) can go down as well as increase and isn’t guaranteed.
Only infants who were born on or after 1st September 2002 are allowed to start up a Child Trust Fund. If you have above-mentioned date who are not entitled you could contemplate saving for them with a Child Bond – it’s a tax-free savings plan looking for long-term growth. There can be no doubt that saving for a child is a rewarding means of preparing for the future.
