High Interest Saving for Your Child - Child Trust Fund
October 1st, 2008It is shocking to know that parents still do not realise that new babies get a free voucher from the the State to save in a Child Trust Fund. The money can be invested in any one of threesorts of CTF account, Stakeholder - a shares-based account that swaps into cash, a savings account or a shares account.
Scottish Friendly is an authorised provider of the Child Trust Fund. The Government is eager for the public at large to have access to Stakeholder accounts and this is the form of account that we are providing. This means that:
• Investments are paid into our Managed Growth Fund, which hopes to provide good growth potential.
• It invests in part in shares to make the most of potentially higher returns over 18 years, compared to a cash deposit account (although the value of shares can fall as well as rise whereas capital would be protected in a deposit account).
• It is available with a low ‘Stakeholder’ funds charge of just 1.5% per year
• At age 18 the young person will receive a lump sum, free of Capital Gains and Income Tax under present law.
• Its affordable - extra payments can be placed in the account from as little as £10
Anyone - parents, grandparents, aunts and uncles, friends - can give to the Child Trust Fund to boost the child’s Fund to a maximum of £1,200 per year (once added, this money This money cannotbe withdrawn).All this means our Stakeholder account offers a good balance between potentially high returns and a reduced level of risk. There is also the additional assurance that our account is in accordance with the Government’s stakeholder criteria. However with 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 invested) can rise as well as decrease whose birthday is and is not guaranteed.
Only children born on or after 1st September 2002 are entitled to start up a Child Trust Fund. If you have older kids who are not eligible you could think about saving for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth.
