The Alternative Remedies Guide

Have you got to grips with the Child Trust Fund and the benefits that it can bestow upon your kids? A markedly

modest number of parents appear to realise that all new babies receive a free £250 voucher from the the State to put. Your son or daughter’s vouchermay be invested in any one of threesorts of CTF account, Stakeholder – a shares-based account that switchesinto cash, a savings account or a shares account. It is a great opportunity to invest financial requirements of a young person

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

• Investments are paid into Scottish Friendly’s Managed Growth Fund, which hopes to provide good growth potential
• An investment is made 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 canfall as well as increase whereas capital would be protected in a deposit account)
• It is available with a low ‘Stakeholder’ funds charge of just 1.5% per year
• At age 18 the child will get a lump sum, wholly 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 notable attraction of the Child Trust Fund is that anyone – parents, grandparents, aunts and uncles, friends – may add to the Fund to a maximum of £1,200 per year to help boost the child’s Fund (once added, this money cannot be withdrawn).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 offers a good balance between possible 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 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 placed) can decrease as well as go up and isn’t guaranteed.

Only children born on or after 1st September 2002 are permitted to start up a Child Trust Fund. If you have children born before the {1st of September 2002 who are not allowed you could think about saving for them with a Child Bond – it’s a tax-free savings plan aiming for long-term growth. It is evident that investing for your son is a sound means of preparing for possible future credit crunches.