As children go back to school after the summer holiday thoughts begin to turn to what happens
when they leave school and start their adult life – a transition which is much easier with a solid
financial base.
At birth, the Government makes £250 available to each child which is topped up by another £250
on their seventh birthday. The hope is that parents and others will add their own contributions on
a regular basis.
It is reported that before the launch of the child trust fund, approx. 15 – 19% of youngsters
had some sort of long term investment made for them but this has now increased to between 45 and 50%.
Parents are now more aware of saving for their children’s future and around 8% make lump sum payments
into the accounts. It is calculated that if parents put aside £2.70 per day for their child’s trust
fund from birth then this will pay for their offspring’s university education and allow them to graduate
debt free.
There are three types of child trust funds:
Savings accounts
- which earn interest.
Equity funds
- which focus on maximizing returns from equity investments
Stakeholder funds
- which are invested in equities but with capped management fees.
There are lots of companies offering trust fund accounts and it is worth checking on a regular
basis to ensure that you are receiving the best interest available as child trust funds can be
moved to different providers and this option should be considered on a regular basis.
Where parents do not nominate payments to be made into any specific child trust fund the Government
puts credits into a stakeholder account it nominates.
Child trust funds were only established in 2002 and children aged 8 and over do not receive the
public subsidy towards their future. Other high interest children’s savings accounts should be
considered to help provide a good start for their adulthood.
Why not contact us and let us help you decide the best way to ensure a good return on any
investments, not just child trust funds.