Open a child trust fund – or the Government will do it for you.
HM Revenue & Customs has issued more than two million vouchers worth at least £250 each to families with children born on or after 1 September 2002. If you don’t use the vouchers within a year of issue, the Government will invest the money on the child’s behalf.
The first batch of vouchers was sent out in January 2005, so time is running out. But the latest figures show that only 1.1 million vouchers have been used to open accounts. The money in a child trust fund (CTF) grows tax-free until the child is 18. Parents and other relatives and friends can add top-ups of up to £1,200 a year.
The longer you delay, the more you miss out on tax-free growth. If you had invested your £250 voucher in Invesco Perpetual’s UK Smaller Companies fund when CTFs went live in April, you would now have £296 – an increase of 18%.
Had you picked the F&C Emerging Markets investment trust, your money would have soared 51% to £377, says Faith Archer in The Daily Telegraph Money. So go on, what are you waiting for?