Buzz Gnosis

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?Not many UK parents markedly

insubstantial number of parents seem to be aware of the fact that all new babies get a free £250 voucher from the government to invest. Your son or daughter’s vouchercan be invested in any one of threetypes of CTF account, Stakeholder – a shares-based account that changesinto cash, a savings account or a shares account. It is a great opportunity to for the future financial requirements of a youngster

Scottish Friendly is a designated provider of the Child Trust Fund Voucher. The State is eager for the public to have access to Stakeholder accounts and this is the kind of account that we are catering for. This means that:

• Investments are placed into Scottish Friendly’s 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 canfall 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
• When attaining the age of 18 the young person will get a lump sum, completely free of Capital Gains and Income Tax under prevailing law
• It’s affordable – extra payments can be put in the account from only £10

A major attraction of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – if they want can add to the Fund to a top limit of £1,200 per year to help increase the child’s Fund (once added, this money is not able to be withdrawn).

Put succinctly our Stakeholder account offers a good balance between possible high returns and a reduced level of risk. There’s also the additional assurance that our account is in accordance with with the Government’s stakeholder criteria. However this does not mean that returns are assured or that Stakeholder accounts are suitable for everyone. Bear in mind that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is held) can go down as well as increase and is not guaranteed.

Only children born on or after 1st September 2002 are entitled to open a Child Trust Fund. If you have older kids who are not eligible 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 saving for your children is a sound means of preparing for possible future credit crunches.