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You’ve had all the bumph on child trust funds, but what does it all mean and how can you use them to the max? The experts at Myeggnest.com explain the ins and outs.
So how do you get started? Well, at birth, each child receives a voucher for £250 (or £500 if the child is from a low income family) to be invested for the benefit of the child. The parents have a year from issue of the Child Trust Fund voucher to invest into one of the many registered Child Trust Fund accounts, managed by a range of providers. If the parents haven’t done this after a year, then HM Revenue & Customs will invest the money into a default stakeholder account on behalf of the child.
If you need further assurances then take some comfort that all Child Trust Funds are covered by the Financial Services Compensation Scheme. That means that all funds are fully covered for the first £50,000 of loss. Most Child Trust Funds will not grow to that level during their 18-year life so all savings are fully protected under the protection scheme.
Comparing Child Trust Fund accounts and their relative merits is straightforward. There are comparison websites that help, such as www.myeggnest.com, a free, independent children’s saving website that helps families save for their children’s future. Here you can see the main benefits of each type of fund, how they have performed recently and also see comments/reviews from a range of contributors. Even if you are a financial markets novice, the simple descriptions and easy to follow recommendations should give you a head start.