£250 for Your New Born

It is shocking to know that parents still do not realise that babies get a £250 voucher from the the government to place in a Child Trust Fund. The child's voucher may be invested in any one of three kinds of CTF account, Stakeholder - a shares-based account that switches into cash, a savings account or a shares account.

Scottish Friendly is an accredited provider of the Child Trust Fund. The State is eager for the public at large to have access to Stakeholder accounts and this is the sort of account that we are offering. This means that:

• Investments are saved into our Managed Growth Fund, which aims to provide strong growth potential.

• It invests in part in shares to take advantage of potentially higher returns over 18 years,compared to a cash deposit account (although the value of shares can fall as well as go up whereas capital would be protected in a deposit account).

• It is available with a low 'Stakeholder' funds charge of only 1.5% per year

• At age 18 the child the receive will receive a lump sum, free of Capital Gains and Income Tax under present law

• It is affordable - additional payments can be put in the account from just £10

Anyone - parents, grandparents, aunts and uncles, friends - can contribute a maximum to the Child Trust Fund to increase the Fund to a maximum of £1,200 per year (once added, this money may not be withdrawn).

Basically our Stakeholder account provides a good balance between possible high returns and a lower level of risk. There is also the additional assurance that our account meets with the Government's stakeholder criteria. Nevetheless this doesn't mean that returns are assured or that Stakeholder accounts are appropriate for everyone. Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can rise as well as fall and is not guaranteed.

Only children who were born on or after 1st September 2002 are allowed to open a Child Trust Fund. If you have older kids who are not entitled you could contemplate investing for them with a Child Bond - it's a tax-free savings plan aimed at long-term growth.