November 26, 2008
Invest in the Future for Your Son or Daughter, Choose the Right Way to Invest the 250 Pounds
Heard about the Child Trust Fund? a small amount seem to know about the fact that all newly born babies get a free £250 voucher from the government to invest in a Child Trust Fund. Your son or daughter’s voucher may be invested in any one of three sorts of CTF account, Stakeholder – a shares-based account thatchanges into cash, a savings account or a shares account. It is a great opportunity to invest for the future needs of a youngster
Scottish Friendly is a licensed provider of the Child Trust Fund The Government is keen for the public at large to have access to Stakeholder accounts and this is the type of account that we offer. This means that:
Investments go 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 can
fall as well as increase whereas capital would be protected in a deposit account)
It comes with a low ‘Stakeholder’ funds charge of only 1.5 percent every year
When a person reaches the age of 18 the young person will receive a lump sum, totally free of Capital Gains and Income Tax under current law
It is very affordable – extra payments can be put in the account from only £10
A particularly advantageous aspect of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – can add to the Fund to an uppermost limit of £1,200 per year to help increase the child’s Fund (once added, this money cannot be withdrawn).
What this means is that our Stakeholder account offers a good balance between possible high returns and a reduced level of risk. There is also the additional assurance that our account is in accordance with with the Government’s stakeholder criteria. Nonetheless this doesn’t mean that returns are assured 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 placed) can go down as well as go up and is not guaranteed.
Only children born on or after 1st September 2002 are qualified to start up a Child Trust Fund. If you have older kids born before the above-mentioned date who are not entitled you could look at saving for them with a Child Bond – it’s a tax-free savings plan intended for long-term growth.
It is evident that saving for your son is a sensible means of preparing for the world to come.
