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However, it is at this time that parents should also consider saving a little each year to finance special occasions or to accommodate expenses that will come later on in their child's life, such as university fees, driving lessons or putting a deposit down upon their first home.
Although for new parents such costs are a long way off, they will ultimately be one of the biggest costs that they will face as a parent. The National Union of Students, for example, puts the total cost of university, including tuition fees and living expenses at £30,000.
The most beneficial way for parents to save up for these lifetime events is to set up a Child Trust Fund from an Inland Revenue approved provider, such as the Halifax, which not only enables them to receive an initial sum of at least £250 from the Government, but also enables them to make regular, additional, tax-free contributions into the investment product.
The Halifax Stakeholder Child Trust Fund will invest in a FTSE 100 Tracking fund, managed by Insight Investment, for long-term growth potential. The key features are:
- There are no initial or exit charges.
- The annual management charge is 1.5 per cent. There are no other charges.
- Additional regular or one off contributions can be made from as little as £10 to a maximum of £1,200 per investment year.
- All contributions into the CTF will be invested in the FTSE 100 Tracker Fund until the child is 13 years old. From this point the invested funds will gradually be managed into lower risk Lifestyle investments until the child reaches 18 years.
- No withdrawals are allowed before the age of 18.
- Parents, family and friends can also make additional tax-free contributions totalling £1,200 each year into the Halifax Stakeholder Child Trust Fund until the account matures on the child's 18th birthday.
Ray Milne, managing director of Halifax Financial Services, said:
"This is an ideal opportunity for all qualifying parents to start saving for their children's futures. Putting a little aside every month means that by the time your children are 18 you could have built up an impressive nest egg."
Thursday, March 03, 2005
Savings for Children Directory:
Savings for Children - Child Trust Fund
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