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Where Can I Invest My Child Trust Fund?

Every child born on or after September 1st 2002 is entitled to a £250 voucher, paid for by the Government, which must be invested into a Child Trust Fund. Anyone can pay into the fund, and the Government make an additional £250 payment into it when the child turns seven. There is a maximum of £1,200 that can be invested each year (not including the Government vouchers) and the account can not be accessed until the child is 18. Most banks and building societies now offer Child Trust Fund options, the main three are:

Savings accounts: Any money you invest is secure, but unlike with investment accounts, will not rise in value apart from basic interest. As with all accounts your provider will charge you for the cost of running it, so you should check the cost before you sign up.
Accounts that invest in shares: Your child’s money is invested by buying shares in companies. When those companies do well and the shares go up in value, they make money. This type of account has the potential to do well over a long period because poor performance of shares in some years can be made up for by good performance in others, and over a long time period the stock market’s value tends to rise more than it falls. The charge on this type of account is usually a percentage of its value.
Stakeholder account: This account also invests in shares, but the Government has made certain rules to reduce the risk i.e. your child’s money is not invested in just one company, as they could lose out if that company does badly, and once your child is 13, money in the account starts to be moved to lower risk investments. The charge on the stakeholder account is limited to no more than 1.5 per cent a year and it is he stakeholder account is the one HM Revenue & Customs will open if you don’t use the voucher before it expires.

Child Trust Fund Providers:

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