All the major banks and building societies provide Child Trust Fund accounts as one of their investment options, so you will need to shop around for the best deal. But you will also need to think about what type of Child Trust Fund you want to go for. Under the scheme, each child (born on or after September 1st 2002) will get an initial payment from the Government of £250 to invest into a Child Trust Fund. This money has to be put into a fund, and the Government will make an additional payment of £250 when the child reaches the age of seven. However, the money, plus any interest, gains from investment, or extra money put into the account by friends and family, cannot be accessed until the child is 18.
There are three different types of Child Trust Fund:
- Accounts the invest in shares: These accounts invest your child’s money by buying shares in companies. When those companies do well and the shares go up in value, they make money.
- Savings accounts: If you don’t want to invest in shares, you could choose a savings account for your child’s Child Trust Fund account. With a savings account any money you invest is secure and will accrue interest
- Stakeholder accounts: Your child’s money in invested but the Government has made certain rules to reduce the risk of investing in shares. The charge on the stakeholder account is limited to no more than 1.5 per cent a year and this is the account HM Revenue & Customs will open if you don’t use the voucher before it expires.
To find out more about the different Child Trust Funds on the market, why not try one of the links below?
