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Understand Child Trust Funds (CTFs).

Government Payments for Babies' 18-year investment.

The best deposit rate at the time of writing is 6% at Britannia and Nationwide Building Societies, however, these come with small print: Britannia's drops to 4.75% after two years, while Nationwide's falls to 5% if mum n dad can't top-up the accounts by a minimum £240 per year.

There are also some nice deals available to residents within the operating area of a few building societies, and remember that traditionally shares have out-performed deposit accounts long term and that the Child Trust Fund is an 18-year investment, though past performance is no guide to the future, and personal attitude to risk must be taken into account.

The Rules.

The handout is £250, by way of a voucher. Children born between September 1st 2001 and April 5th 2003 get £277, little ones born between April 6th 2003 and April 5th 2004 get £268, while those born between April 6th 2004 and April 5th 2005, can expect £256.

Less well-off families get a further £250 (This is defined as a household income of less than £13,480 and who get the full amount of child tax credit). Further state payments are proposed for the child's 7th and 11th birthdays, in the region of £250 - 500. Parents, grandparents and others can put in up to £1,200 a year. The money invested will be free of income and capital gains tax.

Any money in the CTF is owned by the child and will remain locked-in until their 18th birthday. Parents can open accounts once they receive their vouchers but no money will have gone into them until after April 6th 2005.
The official web site is www.childtrustfund.gov.uk.
The help line is 0845 302 1470.

Copyright 2000 - 2007 ©Kevin Anthony Jones. All rights reserved.