Child Trust Funds
Child Trust Fund Voucher
Your Child Trust Fund voucher is valid for 12 months from the date of issue. If after 12 months you have still not used your voucher to open an account, the Inland Revenue will open a Stakeholder Child Trust Fund on your child's behalf.
Your Child Trust Fund voucher entitles you to open one of three broads types of Child Trust Fund account for your child. The main difference between the three is in how your money is invested and the level of risk involved.
Types of Child Trust Fund
Stakeholder Child Trust Fund
The Stakeholder Child Trust Fund is subject to government guidelines and generally regarded as lower risk with investments made in tracker and/or balanced growth funds. Lifestyling is a prominent feature, introduced to ensure the accumulated fund has a safe landing during the few years preceding your child's eighteenth birthday. Minimum investments start from as low as £10 (after Child Trust Fund voucher invested) and annual fees are capped at a maximum of 1.5%
Ethical Child Trust Fund
The Ethical Child Trust Fund does not invest in companies who generate a significant turnover from trading in, but not limited to, alcohol, tobacco, military goods, goods associated with animal testing, and in countries where violation of human rights is commonplace. You are well advised to check the details of each Child Trust Fund as each provider may have a different ethical investment policy.
Shariah Child Trust Fund
The Shariah Child Trust Fund only invests in companies who adhere to Islamic (Shariah) law, e.g. companies with interests in and involvements with (but not limited to) tobacco, pork, alcohol, arms manufacturing would not form part of the investment.
Non Stakeholder Child Trust Fund
Consisting of equity and savings based investments, there are two choices:
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Non-Stakeholder Equity Child Trust Fund
Not being subject to a strict government ruleset offers a wider choice of savings options. However Lifestyling may or may not be included and fees and charges are open ended - they could be more or less than 1.5%.
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Non-Stakeholder Savings Child Trust Fund
Being the safest of the three, the savings account with an attractive rate of interest, no charges (charge is built in to the interest rate) and secured capital, does not however have the same opportunity for growth. Inflation will erode.