Archive for the 'Investing In Markets' Category

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What the Child Trust Fund Can Do for Your Son or Daughter, How to Invest the Two Hundred and Fifty Pounds

Monday, November 24th, 2008

Are you aware of the Child Trust Fund and its benefits? surprisingly few appear to have heard of the fact that all infants receive a free £250 voucher from the government to put in a Child Trust Fund. The child’s voucher can be invested in any one of three varieties of CTF account, Stakeholder – a shares-based account thatswaps into cash, a savings account or a shares account. It is an excellent way to invest for the future requirements of a youngster

Scottish Friendly is an approved 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 are offering. This means that:

Investments are deposited into Scottish Friendly’s Managed Growth Fund, which hopes to provide strong growth potential

It invests in part 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 rise whereas capital would be protected in a deposit account)

It comes with a low ‘Stakeholder’ funds charge of only 1.5 percent per year

When reaching 18 the child will get a lump sum, completely free of Capital Gains and Income Tax under current legislation

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

A notable attraction of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – may give to the Fund to a top limit of £1,200 per year to help boost the child’s Fund (once added, this money cannot be withdrawn).

All this means our Stakeholder account provides a good balance between possible high returns and a lower level of risk. There is also the additional assurance that our account meets with the Government’s stakeholder criteria. Nevertheless this does not mean that returns are guaranteed 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 fall as well as rise and is not guaranteed.

Only children whose birthday is on or after 1st September 2002 are authorised to open a Child Trust Fund. If you have older kids born before the 1st of September 2002 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 undoubtedly the case that investing for a child.your children is a rewarding means of preparing for the world to come.