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Are you aware of the Child Trust Fund and its benefits? surprisingly few appear to have heard of the fact that all newborn children get a free £250 voucher from the State to invest in a Child Trust Fund. The voucher may be invested in any one of three types of CTF account, Stakeholder - a shares-based account thatchanges into cash, a savings account or a shares account. It is a great opportunity to save for the future needs of a young person

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

Investments go into our Managed Growth Fund, which seeks to provide good growth potential

An investment is made in part in shares to take advantage of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can
go down as well as increase whereas capital would be protected in a deposit account)

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

At age 18 the child will get a lump sum, entirely free of Capital Gains and Income Tax under current law

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

One of the highlights 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the Fund to a top limit of £1,200 per year to help boost the child’s Fund (once added, this money is not allowed to be withdrawn).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 is also the extra assurance that our account complies with the Government’s stakeholder criteria. Nonetheless this doesn’t 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 placed) can go down as well as rise and would not be guaranteed.

Only infants born on or after 1st September 2002 are authorised to open a Child Trust Fund. If you have older children born before the 1st of September 2002 who are not eligible you could look at investing for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth.

There can be no doubt that saving for your son is a sound means of preparing for the world to come.