The Alternative Remedies Guide

Have you heard that newly born babies get a free £250 voucher from the the State to save in a Child Trust Fund. The money may be invested in any one of three sorts of CTF account, Stakeholder – a shares-based account that changes into cash, a savings account or a shares account.

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

• Investments are sent into our Managed Growth Fund, which intends to provide good growth potential.

• It invests 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 decrease 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% a year

• When attaining the age of 18 the young person the get will a lump sum, wholly free of Capital Gains and Income Tax under prvailing legislation.

• It is affordable – payments can be placed in the account from from as little as £10

Anyone – parents, grandparents, aunts and uncles, friends – can augment the Child Trust Fund to a maximum of £1,200 per year (once added, this money cannot be withdrawn).

All this means that our Stakeholder account provides a good balance between potentially high returns and a reduced level of risk. There is also the extra assurance that our account complies with the Government’s stakeholder criteria. Nevertheless does not this mean that returns are assured or that Stakeholder accounts areappropriate for everyone. Bear in mind that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can go down as well as rise 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 who are not entitled you could look at investing for them with a Child Bond – it’s a tax-free savings plan intended for long-term growth.