Anyone can contribute to the fund, and the Government then pays a further £250 at age seven, but there is a limit of £1,200 per year, and the money cannot be accessed until the child is 18.
The Government vouchers can only be put into a Child Trust Fund – not a normal savings account – and most major banks and building societies now offer child trust funds.
There are three main types of account and it is up to the parents to decide which option is the best Child Trust Fund for their child. The options are:
- Savings accounts: Any money invested is secure – on turning 18, the child will get whatever money has been put in the account, plus interest.
- Accounts that invest in shares: These accounts invest your child’s money by buying shares in a number of companies. When those companies do well and the shares go up in value, they make money.
- Stakeholder accounts: A less risky option, stakeholder accounts invest your child’s money in company shares. The Government has made certain rules for these accounts to reduce the risk of investing in shares.
