Free Articles on Investments and many other topics
Another free Investments article for you by Tony Heywood
Titled: What is a Child Trust Fund?
What is a Child Trust Fund?
Article Summary: What is a child trust fund? How do they work and where can you invest your child trust fund voucher?
What is a Child Trust Fund
You have a new arrival in the family. A wonderful new addition, something that will enrich your life but there is so much to learn and you need to learn it quickly. One of the last things on your mind is the fund for university, or their first car, or their wedding but the Child Trust Fund provides a start for all of these outcomes.
The Child Trust Fund is a long-term saving account that the child can withdraw the money from once they become an adult at the age of 18. The government in the UK provides you with a child trust fund voucher or CTF with the value of £250. If your household income is less that £15,575 you will also receive a top up of on top the initial £250. The top up is linked to the amount of Child Tax Credit that you receive. You need to make sure you make the claim your child tax credit within the first three months of the babies birth as the government will only back date the payments for three months. You don't want to miss out.
To qualify for a Child Trust Fund your child must:
- Been born on or after 1st September 2002
- Not be subject to immigration control
- Lives in the UK
- You receive Child Benefit for the child
There are different types of child trust fund schemes and a large variety of Child Trust Fund providers. The maximum that can be saved, tax free, for a child each year is £1,200. Anyone can add money to the account for the child, it is not just limited to the parents. Everyone from grandparents, aunt, uncles, family friends that can all add money directly into the child trust fund account.
When the child reaches the age of seven the government will provide another £250 top up for the account. Those children on lower incomes will receive a further £250 in additional funding.
When the child reaches the age of 16 they will be able to make some decisions about how their child trust fund is managed but they will not be able to access the money in the account until they reach the age of 18.
If the full £500 is invested and nothing more is added to the child trust fund and at a rate of 7% the most basic of funds will return in the region of £1410 when it matures after 18 years. This would help towards college or university fund but would only make a small dent in the overall cost of a university education as the average student now leaves with debts of £12,000.
The first child trust funds to mature will be in September 2020 it will be interesting to see how the windfalls will be spent. Will there be a rush for driving lessons, game consoles and foreign holidays or will the money be reinvested for the future. Only time will tell.
Tony Heywood ©
Article Source: http://www.upublish.info
About the Author:
Tony Heywood
Child Trust Fund
Keywords: child+trust+fund, CTF+voucher, child+saving+plans
**NOTE** - Tony Heywood has claimed original rights on the article "What is a Child Trust Fund?" ... if there is a dispute on the originality of this article ... please contact us via our Contact Form and supply our staff with the appropriate details of dispute.
