November 25, 2008
Invest in the Future for Your Child, Choose the Right Way to Invest the 250 Pounds
Heard about the Child Trust Fund? Few UK parents appear to have heard of the fact that all new babies get a free £250 voucher from the government to place in a Child Trust Fund. The voucher may be invested in any one of three kinds of CTF account, Stakeholder – a shares-based account thatchanges 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 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 supplying. This means that:
Investments are sent into Scottish Friendly’s Managed Growth Fund, which seeks to provide good growth potential
It invests in part 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
decrease as well as go up whereas capital would be protected in a deposit account)
It is available with a low ‘Stakeholder’ funds charge of only 1.5 percent perannum
When a person reaches the age of 18 the young person will receive a lump sum, completely free of Capital Gains and Income Tax under current legislation
It is very affordable – extra payments can be placed in the account from as little as £10
A major attraction of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – can give to the Fund to an uppermost limit of £1,200 per year to help augment the child’s Fund (once added, this money may not be withdrawn).
Put succinctly our Stakeholder account provides a good balance between potentially high returns and a reduced level of risk. There’s also the additional assurance that our account meets with the Government’s stakeholder criteria. Nevertheless this doesn’t 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 held) can fall as well as go up 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 above-mentioned date who are not entitled you could contemplate investing for them with a Child Bond – it’s a tax-free savings plan which was created for long-term growth.
There can be no doubt that saving for your daughter is a rewarding means of preparing for the future.
