Types of Account

Investing your child's voucher is an important decision; getting it wrong could severely impact on the return that your child gets when they reach 18.

There are three types of Child Trust Fund account that you can choose:

Savings

This is the basic kind of CTF account and the most secure. Your child will get back the value of the voucher, together with any interest. But the downside of this being the most secure account is that, while it pays interest, it is less likely to grow as much as an account that invests in shares.

Shares

This account carries more risk than a basic savings account as the money will be invested in stocks and shares and the value of those shares may go down as well as up. But past experience over the last 40 years has shown that money invested in shares over a long period of time usually does better than money invested in a savings account.*

Stakeholder

Stakeholder accounts invest your child's money in shares in a number of companies when the account is opened, but when your child is 13 the money in the account begins to be moved to lower risk investments or assets. This means that although your child's money may not benefit if the stock market is performing well, it is protected from stock market losses as they approach their 18th birthday. You can put in extra amounts into the account from as little as £10 and the fees for the account have been limited by the government to no more than 1.5% a year - which means the charge can be no more than £1.50 for every £100 in the account. The charges on all other types of CTF account are not limited in this way.

Which Type of Account is Suitable?

If you are not sure which type of account is right for you the Government has built an "Account Chooser" which will help you make up your mind. If you click here the Account Chooser will open in a new window.

*Source official Government CTF website.