Just over 3 months old and already we are planning JP’s brilliant career in; golf, football, tennis and, my personal favourite formula one.  No pressure son!  If he does grow up hankering for hot tarmac and a kamikaze need for speed we need to accelerate our savings plan for him now.

The £250 child trust fund voucher from the government (thank you Mr Darling) has been rescued from the pile of junk mail (annoying), congratulations cards (lovely), bills (too depressing for words) and invested in an ethical stakeholder account.

JP won’t be able to get his diesel stained mittens on the cash until his 18^th birthday.  I hope at the very least it can pay for a celebratory holiday / bash / beer when he passes his exams.

Here is how I invested JP’s Child Trust Fund voucher:

1.  Made sure I was sent a child trust fund voucher by signing and returning the child benefit form.

2.  Received voucher through the post, went online to government website to get the lowdown on child trust funds.

In summary, the child trust fund is:

• a long-term savings investment account which your child can access on their 18^th birthday
• a government tool to help your child understand the benefits of saving
• to be used within a year of you receiving it or the government will invest it for you
• opened via a Child Trust Fund voucher (either £250 or £500 depending on whether your household income is over or under £15,575)
• topped up with a further £250 or £500 from the government when your child reaches seven years old
• topped up to £1,200 per year by you, relatives or friends (optional)
• is tax free and does not affect any other benefits you may be receiving

3.  Reviewed the three different type of child trust fund accounts:

• Stakeholder Account – your child’s money is invested in company shares until the child is 13 when it is then moved to lower risk investments.
• Shares (non-stakeholder) Account - your child’s money is invested in company shares. Unlike the stake holder, money isn’t moved into lower risk investments when they reach 13.
• Savings Account - your child’s money is put into a cash savings account which pays interest.

I decided to go for the stakeholder account, as the middle path – medium risk – investment for JP as he will be investing in company shares over an 18 year period.  Historically, over and 18-year period, accounts that invest in shares almost always do better than savings accounts, according to the government’s CTF information booklet.

Continued…