08:46 10 October 2013
There are many ways to help your children start their financial lives off properly. There are Junior Independent Savings Accounts and Child Trust Funds as well that can give your child a head start on their finances.
Here are a few things you should know about Child Trust Funds:
o Share Child Trust Funds—the value of the fund increases whenever the value of the shares also increases. Likewise, the reverse is also true which sometimes causes concern. In reality since the Child Trust Fund has many years to increase, a few decreases don’t usually present much of a problem.
o Stakeholder Child Trust Funds—money is also invested in shares, but is subject to government guidelines to ensure that the people managing the money are not taking unnecessary risks. There is also a limitation on the fees which can be charged for the management of the fund.
If you receive the voucher to open one of these types of Child Trust Funds but forget to do anything, an account will be opened in the name of your child. Accounts will automatically be made Stakeholder Child Trust Funds, so if you know that you would prefer to have a Share Child Trust Fund you’ll want to make sure you open the account before the expiration date of the voucher.
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