A Restless Bunch

Are you aware of the Child Trust Fund and its benefits? Few UK parents seem to have heard of the fact that all newborn children receive a free £250 voucher from the State to put in a Child Trust Fund. Your son or daughter’s voucher may be invested in any one of three kinds 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 an authorised provider of the Child Trust Fund The Government is eager for the general public to have access to Stakeholder accounts and this is the type of account that we are catering for. This means that:

Investments are saved into our Managed Growth Fund, which hopes to provide strong growth potential

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

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

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 present legislation

It is very affordable - extra payments can be placed in the account from as little as £10

One of the highlights of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - can give to the Fund to a ceiling of £1,200 per year to help augment the child’s Fund (once added, this money is not able to be withdrawn).

What this means is that our Stakeholder account provides a good balance between potentially high returns and a lower level of risk. There is also the additional assurance that our account complies with the Government’s stakeholder criteria. However this does not mean that returns are guaranteed or that Stakeholder accounts are suitable for everyone. Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is placed) can decrease as well as increase and is not guaranteed.

Only infants born on or after 1st September 2002 are eligible to start up a Child Trust Fund. If you have older kids born before the 1st of September 2002 who are not qualified you could consider saving for them with a Child Bond - it’s a tax-free savings plan which is intended for long-term growth.

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