So what is this Child Trust Fund that all the talk is about?Are you one of the lucky people who are in the know about the Child Trust Fund? Are you clued up on the Child Trust Fund? Hardly any mothers and fathers surprisingly
sparse number of parents appear to appreciate that all new babies receive a free £250 voucher from the the State to place in a Child Trust Fund. The 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 a great opportunity to save needs of a child
Scottish Friendly is a licensed provider of the Child Trust Fund Voucher. The Government is eager for people to have access to Stakeholder accounts and this is the kind of account that we are offering. This means that:
• Investments are placed into Scottish Friendly’s Managed Growth Fund, which hopes to provide strong 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 cango down as well as rise whereas capital would be protected in a deposit account)
• It comes with a low ‘Stakeholder’ funds charge of just 1.5% per year
• When attaining the age of 18 the young person will receive a lump sum, entirely free of Capital Gains and Income Tax under prevailing law
• 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 contribute to the Fund to a ceiling of £1,200 per year to help boost the child’s Fund (once added, this money may not be withdrawn).
All this means our Stakeholder account provides a good balance between potentially high returns and a reduced level of risk. There’s also the extra assurance that our account is in accordance with with the Government’s stakeholder criteria. Nonetheless 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 rise and is not guaranteed.
Only children who were born on or after 1st September 2002 are qualified to start up a Child Trust Fund. If you have above-mentioned date who are not qualified you could look at investing for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth. It is evident that investing for your daughter is a sensible means of preparing for the future.