Once you receive the Child Trust Fund voucher from the Government there are three steps involved in choosing a Child Trust Fund. If you don't open a Child Trust Fund then the Government will open one for your child automatically after they turn one year old.
Step 1: Choose the type of account that you would like to open
There are three types of accounts - Stakeholder, Shares and Savings. Your choice will depend upon where you are comfortable putting money for your child. There is information on the next tab to help you choose.
Step 2: Choose a Child Trust Fund Provider
There are more than 40 Providers in the market and we've shown a summary below. If you would like more help choosing a Provider then click here.
Step 3: Contact the Provider and send them the Government voucher
You will need to provide them with some basic information. It varies by Provider but in some cases you may be able to simply hand over the voucher and complete a declaration that you are aged at least 16 and have parental responsibility for the child.
Things to think about when choosing.
Risk and return
Many parents may prefer a savings account, because it does not involve any stock market risk. However, a Child Trust Fund is a long term investment and over periods of 10 years or more stock market investments have almost always produced better returns than savings accounts. So a Share or Stakeholder account may be a suitable choice.
Charges
For Savings accounts the costs are reflected in the interest rate offered. With Savings and Stakeholder accounts the costs are shown separately and will reduce the return your child gets. Compare accounts and look for ones with low charges. The charges for running a Stakeholder account are limited to 1.5% of the value of the fund each year.
Minimum Investment
If you or family and friends want to add extra to your child's account then think about the smallest sums you might want to give. Different Providers set the minimum that they will accept at different levels. With a Stakeholder account all providers must accept a minimum payment as low as £10 for either a lump sum or a regular monthly payment.
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