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Understand Child Trust Funds (CTFs).

Please read on.

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.

Please read on.

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.
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