- Stakeholder Child Trust Funds
- Non Stakeholder Savings Child Trust Funds
- Non Stakeholder Equity Child Trust Funds
Stakeholder Child Trust Funds
Of particular appeal to parents who are perhaps unfamiliar with Stock Market based investments or nervous about the risk of such investments, the Stakeholder Child Trust Fund operates within strict parameters and guidelines set out by the UK Government. In setting out the framework for the operation of the Stakeholder Child Trust Fund, you should remember the UK Government are not providing a guarantee, or recommendation for the Stakeholder Child Trust Fund.
As is always the case when selecting any Child Trust Fund account, the onus is on you to chose the most appropriate Child Trust Fund which best reflects your circumstances and investment profile. If you are in any doubt consult professional financial advice.
Government criteria requires the Stakeholder Child Trust Fund to be largely equity market based, invested in more than one company and be a suitable investment over the period. Consequently you will tend to find they are largely invested in a broad spectrum of companies through Tracker and Balanced Managed Funds. These type of funds are considered to be at the lower risk end of the investment spectrum.
Lifestyling is a particular feature and is designed to protect the accumulated wealth of the account from a sudden market downturn before your child reaches eighteen. Around your child's thirteenth birthday, the Child Trust Fund provider will consider the relative performance, the investment horizon and will then decide how soon, and how much of the investment should be re-allocated into safer investments, e.g. cash and government stock (Gilts).
Parents, family and friends can all contribute using a variety of methods including, but not limited to, Direct Debit, Direct Credit, Cheque and Standing Order. Whilst minimum payments are higher than if you were to opt for a Non-Stakeholder Equity Child Trust Fund or Non-Stakeholder Savings Child Trust Fund you can expect minimum contributions to start from around £10. Again, the annual contribution must not exceed £1200. In terms of fees, whilst annual management fees will vary, you should expect to pay no more than 1.5%