The Net’s Most Wanteds

Heard about the Child Trust Fund? remarkably few appear to have heard of the fact that all newly born babies are given a free £250 voucher from the State to put in a Child Trust Fund. The voucher may be invested in any one of three sorts of CTF account, Stakeholder – a shares-based account thatswaps into cash, a savings account or a shares account. It is a superb chance to prepare for the future needs of a child

Scottish Friendly is an approved provider of the Child Trust Fund The State is eager for people to have access to Stakeholder accounts and this is the form of account that we are supplying. This means that:

Investments are deposited into our Managed Growth Fund, which hopes to provide good growth potential

An investment is made 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 can
go down as well as go up whereas capital would be protected in a deposit account)

It comes with a low ‘Stakeholder’ funds charge of just 1.5 percent perannum

At age 18 the young person will receive a lump sum, completely free of Capital Gains and Income Tax under current legislation

It is affordable – extra payments can be placed in the account from only £10

An attractive feature of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – can give to the Fund to a maximum of £1,200 per year to help boost the child’s Fund (once added, this money may not be withdrawn).

In a nutshell 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 complies with the Government’s stakeholder criteria. Nevertheless 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 held) can decrease as well as rise and is not guaranteed.

Only children who were born on or after 1st September 2002 are authorised to open a Child Trust Fund. If you have children born before the 1st of September 2002 who are not entitled you could consider investing for them with a Child Bond – it’s a tax-free savings plan intended for long-term growth.

It is undoubtedly the case that saving for your son is a rewarding means of preparing for the world to come.