CTOKOS Blog

Are you aware of the Child Trust Fund and its benefits? a low number of parents seem to know about the fact that all infants get a free £250 voucher from the government to place in a Child Trust Fund. Your son or daughter’s voucher may be invested in any one of three varieties of CTF account, Stakeholder - a shares-based account thatchanges into cash, a savings account or a shares account. It is an excellent way to save for the future requirements of a infant

Scottish Friendly is an accredited provider of the Child Trust Fund The State is eager for the public at large to have access to Stakeholder accounts and this is the form of account that we offer. This means that:

Investments are paid into our Managed Growth Fund, which intends 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 go up whereas capital would be protected in a deposit account)

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

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

It is affordable - additional payments can be put in the account from as little as £10

A particularly advantageous aspect of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - if they want can give to the Fund to a top limit of £1,200 per year to help boost the child’s Fund (once added, this money is not allowed to be withdrawn).

All this means our Stakeholder account offers a good balance between potentially high returns and a lower level of risk. There’s also the extra assurance that our account meets with the Government’s stakeholder criteria. Nonetheless this does not mean that returns are assured 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 rise and is not guaranteed.

Only children who were born on or after 1st September 2002 are entitled to open a Child Trust Fund. If you have children born before the above-mentioned date who are not eligible you could consider saving for them with a Child Bond - it’s a tax-free savings plan which was created for long-term growth.

The fact is that investing for your daughter is a rewarding means of preparing for tomorrow.