All the major banks and building societies now have child trust funds as an investment option. The parent not only has to decide which provider to go with, but also, which type of account to go for – there are three main types:
- Savings Accounts
- Stakeholder Accounts
- Accounts that invest in shares
Stakeholder accounts and accounts that invest in shares have the
potential to make more money by investing your child's cash, but there is an element of risk involved.
If you don’t want to invest in shares, you could choose a Child Trust Fund savings account.
With a
Child Trust Fund savings account, any money you invest is secure. For example if you invest £500, your child will get that sum of money back with interest when they turn 18.
But, although the money earns interest, it might not grow as much as it would if it was invested in shares and as with all accounts, the provider will charge for the cost of running it.
Make sure you look at all the options before deciding which type of Child Trust Fund to go for.