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? Hardly any mothers and fathers remarkably

modest number of parents appear to have made the discovery that all newborn children receive a free £250 voucher from the government to invest. The child’s vouchercan 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 a great opportunity to prepare needs of a youngster

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

• Investments are deposited into Scottish Friendly’s Managed Growth Fund, which intends to provide strong 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 canfall as well as rise whereas capital would be protected in a deposit account)
• It is available with a low ‘Stakeholder’ funds charge of just 1.5% per year
• When reaching 18 the young person will get a lump sum, wholly free of Capital Gains and Income Tax under present law
• It is very affordable – additional payments can be placed in the account from as little as £10

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to an uppermost limit of £1,200 per year to help augment the child’s Fund (once added, this money is not allowed to be withdrawn).

What this means is that our Stakeholder account provides a good balance between potentially high returns and a reduced level of risk. There’s also the extra assurance that our account is in accordance with with the Government’s stakeholder criteria. Nonetheless this does not mean that returns are assured or that Stakeholder accounts are suitable 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 go up and is not guaranteed.

Only children born on or after 1st September 2002 are authorised to start up a Child Trust Fund. If you have above-mentioned date who are not qualified you could think about saving for them with a Child Bond – it’s a tax-free savings plan looking for long-term growth. There can be no doubt that investing for a child is a sensible means of preparing for the world to come.