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Child Trust Fund Accounts

Child Trust Fund accounts are savings accounts set up for children born on or after September 1st 2002. Every child born after this date is given a £250 voucher by the Government in order to invest it in a child trust fund. The money cannot be put into a normal account, only Child Trust Fund accounts, and it cannot be accessed until the child is 18. Anyone can put money into a child's trust fund, but there is a limit of £1,200 a year, although this doesn’t include the initial £250 or the additional Government payment of £250 for each child when they turn seven.

Child Trust Fund Providers:

Engage Mutual Insurance »

There are three main Child Trust Fund accounts, with varying degrees of risk involved, and it is up to the parents to decide which option is best for their child.

Savings accounts: The safe option. Money simply sits in the account, earning some interest.
Stakeholder Accounts: The low risk option. The money is invested in shares, but there are certain rules that ensure the risk is low, for example, investing in a range of areas, and only investing in low risk companies once the child is 13 and just 5 years away from claiming their cash.
Accounts that invest in shares: The riskier option. The money is invested in company shares. This can be very profitable - when those companies do well and the shares go up in value, the child's fund increases, but if the shares plummet, the child's money is at risk.