If you have a child born after 1 September 2002, you'll have been sent one of the Government's Child Trust Fund vouchers. The voucher (for £250) is sent out to all new babies in the UK. A further £250 voucher, will be sent when the child reaches the age of seven.
The vouchers must be used to open a Child Trust Fund account, and there are three types to choose from:
- a straightforward cash savings account,
- a stakeholder equity account (allowing your child to invest in a number of funds with charges no higher than 1.5%)
- a non-stakeholder equity account.
Whilst there have been over 2.5 million Child Trust Fund (CTF) accounts opened so far , there are still a quarter of vouchers issued that have not been invested by the parents who received them.
If you don't invest their voucher within 12 months of receiving it, then the Government will invest it on your behalf, which means it may not be invested in the type of account you would have wanted. You will still be able to transfer it back to an account of your choice, but will just involve you in a little more work.
So, if you have received a voucher and are not really sure what to do with it, remember that the longer it sits on the mantle piece, the more interest your son or daughter is losing out on.
Why not take a look at some of the best cash based
Child Trust Fund deals currently available.
If you fell an equity based account may be a better option and want to find out a bit more, speak to an independent financial adviser who will explain the different options available, as well as any potential risks attached to such investments.
