Children Trust Fund
October 1st, 2008
Are you aware that babies receive a free £250 voucher from the the State to deposit in a Child Trust Fund. The child’s voucher can be invested in any one of three kinds of CTF account, Stakeholder – a shares-based account that changes into cash, a savings account or a shares account.
Scottish Friendly is an authorised provider of the Child Trust Fund. The State is eager for the public to have access to Stakeholder accounts and this is the kind of account that we are supplying. This means that:
• Investments are sent into our Managed Growth Fund, which hopes to provide good growth potential.
• It invests 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 can fall as well as go up whereas capital would be protected in a deposit account).
• It comes with a low ‘Stakeholder’ funds charge of only 1.5% per year
• When reaching 18 the young person the get will a lump sum, completely free of Capital Gains and Income Tax under present legislation.
• It is affordable – payments can be placed in the account from from as little as £10
Anyone – parents, grandparents, aunts and uncles, friends – can contribute to augment the Child Trust Fund to a maximum of £1,200 per year (once added, this money cannot be withdrawn).
All this means that our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There is also the extra assurance that our account complies with the Government’s stakeholder criteria. Nonetheless this does not 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 go down as well as up and is not guaranteed.
Only children born on or after 1st September 2002 are allowed to start up a Child Trust Fund. If you have older kids who are not eligible you should think about investing for them with a Child Bond – it’s a tax-free savings plan for long-term growth.
