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So what is this Child Trust Fund that all the talk is about?Are you one of the lucky people who are in the know about the Child Trust Fund? Are you clued up on the Child Trust Fund? Few UK parents remarkably

small number of parents seem to know about the fact that all babies are given a free £250 voucher from the the State to put. The vouchermay be invested in any one of threekinds of CTF account, Stakeholder – a shares-based account that switchesinto cash, a savings account or a shares account. It is an excellent way to for the future life of a youngster

Scottish Friendly is a designated provider of the Child Trust Fund Voucher. The State is eager for the public to have access to Stakeholder accounts and this is the type of account that we offer. This means that:

• Investments go into Scottish Friendly’s Managed Growth Fund, which intends to provide good 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 cango down as well as rise whereas capital would be protected in a deposit account)
• It is available with a low ‘Stakeholder’ funds charge of only 1.5% per year
• When attaining the age of 18 the young person will get a lump sum, wholly free of Capital Gains and Income Tax under current law
• It is affordable – additional payments can be put in the account from only £10

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the Fund to a top limit of £1,200 per year to help augment the child’s Fund (once added, this money is not able to be withdrawn).

All this means our Stakeholder account provides a good balance between possible high returns and a reduced level of risk. There is also the additional 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. Remember 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 who were born on or after 1st September 2002 are qualified to start up a Child Trust Fund. If you have children born before the {1st of September 2002 who are not allowed you could contemplate 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 saving for a child is a sensible means of preparing for possible future credit crunches.

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