Posts Tagged ‘Scottish Friendly’

February 16th, 2012 Investing No Comments »

Regular Savings – Essential Investors Guide

Twitt

How to open a regular saving account

A regular savings account is just like any other type of investment account, in that all a person needs to do is approach any of the banks, building societies or other financial organisations that offer them.

The best possible way to decide on which type of account to open is to look at not only the interest rate paid, but to also examine the amount of bonuses the specific institution will pay to its regular investors. Nearly all of the accounts will have a tax free allowance of £25 per month, with anything over being taxed by the Government depending on your tax bracket – meaning that this issue does not need considering by the consumer.

There are no real restrictions regarding who can open a regular savings plan, although many places often have a minimum and maximum age limit, with 16-55 being the most popular. Although it is partially tax free, it also will not affect the standing of any Individual Savings Accounts or ISAs that the customer already has.

Paying money in to a regular saving account

With most regular saving plans there is a minimum amount to be invested per month, although this is usually only around £15. Although this is only a small amount, failure to pay it will have significant impacts on the amount of bonuses the account may receive. While there is a minimum, there is no maximum amount that can be paid in per month, although only the first £25 will be tax free.

The advantages of a regular saving account

The main advantage of this type of savings and investments is that there is a guaranteed lump sum payable at the time at which the account matures, which is set when the account is created. This provides the insurance that should the institution invest the money poorly, it will not be lost – meaning that there is virtually no risk associated with this type of account.

Another advantage is when saving for children, child savings accounts can provide an excellent kick start to their adult life. If a parent starts saving just £40 per month for ten years, they can expect a minimum return of £5,220, with most actually coming in at more than that. Aside from Government sponsored schemes, there is no more effective way that a parent can save for their child.

About this Author

If you are interested in reading more information about regular savings and investment plans then please visit the following links:

Scottish Friendly - mutual societies such as Scottish Friendly supply financial services products. Mutual societies are owned by customers, or members. As a result they have no shareholders to pay dividends to, or to account to, so they can concentrate on delivering products and services that meet the needs of their customers.

Share
February 15th, 2012 Investing No Comments »

Cash Child Trust Funds – Essential Investors Guide

Twitt

How to Open a Cash Child Trust Fund

Opening one of these funds is incredibly easy, as the Government sends out a child trust fund voucher to every family when they have a child. This can then be invested in any way the family like – usually in a bank offering the most competitive rates.

When this account is opened, the Government will automatically deposit £250 in to it to get it going, as well as doubling this should the child be from a low income family. This means there is potentially £500 in the account before anyone even pays any money in to it.

Paying Money In

Once the Government has paid their share into the trust fund, family and friends of the child can also place deposits in to it, with the maximum amount each year being £1,200. It goes without saying that if all of the money is paid in at the beginning of the tax year, it will stand to earn far more interest than it would do if paid in instalments.

As well as the money put in by friends and family, there is also the case that the Government will put an extra £250-£500 in to it on the day that the child turns 7 years old. This will stay in the account until the child turns 18, where it will earn interest just like the rest of the money.

The Benefits

The main benefit – as already touched on in this overview – is that the money is safe from the unpredictable nature of shares. It is instead paid a monthly interest, which is determined by the bank or building society used. Although there could be the potential to make a lot more money with the share link trust fund, the cash trust fund has much less risk and is therefore the safe option. Another way to keep the money even safer is to use a stakeholder child trust fund.

Many institutions that offer accounts also offer bonuses, that are payable when the account receives a certain amount of money every year. These can be quite substantial, and for those who already planned to put a lot in anyway, they can yield large results.

The final advantage is that when the money matures, there is no need to pay any tax or other charge to withdraw the final sum. This means that everything ever paid in will belong to the child, who will hopefully use it to improve their life through either university or other means.

About this Author

If you are interested in reading more information about cash child trust funds and investment plans then please visit the following links:

Scottish Friendly - mutual societies such as Scottish Friendly supply financial services products. Mutual societies are owned by customers, or members. As a result they have no shareholders to pay dividends to, or to account to, so they can concentrate on delivering products and services that meet the needs of their customers.

Association of Financial Mutuals – you can find out useful information about mutual and friendly societies by visiting http://www.financialmutuals.org

Share
February 14th, 2012 Investing No Comments »

Important Tips for Child Trust Fund

Twitt

If you are considering investing in a CTF account for your son or daughter, there are several things you should understand about how the fund works.

CTF Basics

The process is relatively simple. First of all, any child born on 1st September 2002 or later that receives Child Benefit will automatically be sent a voucher from the Government. As the child’s parent, you can then decide where you would like to invest the fund on your son or daughter’s behalf. You must choose from a list of select financial organisations. Once the fund has been invested somewhere, you can add money to it as you see fit. Money can be added in a one-off payment or as a monthly payment. You cannot, however, add more than £1,200 each year.

When your child turns 18, he or she will receive the contents of the fund in a lump sum payment. Under the current legislation, this sum will be completely free of all forms of tax. No amount of money can be withdrawn from the CTF account prior to the child’s 18th birthday.

As the child’s parent, you can choose to invest the money on your child’s behalf in one of three types of accounts. CTF accounts can either be shares accounts, savings accounts, or stakeholder accounts. A shares account is an account in which the value of the fund is used to purchase shares which can go up or down in value over time. A savings account is simply an account where the value of the fund remains in cash form with fixed interest. Finally, a stakeholder account is an account in which the value of the fund is first used to purchase shares but then switches to cash with interest a few years before the fund matures.

New Legislation

Recent changes were made to the legislation regarding Child Trust Funds. In May 2010, the government announced that payments to such accounts would be reduced and eventually discontinued. As a result, only children born before January 2011 can qualify for these accounts. In addition, those children born between August 2010 and December 2010 will receive reduced Government vouchers.

Originally when a child reached age 7, the Government would make a deposit into the child’s CTF account. However, under the new legislation, those children turning 7 after 31 July 2010 won’t receive these additional payments. However, even under the new legislation all children born prior to January 2011 will retain their CTF accounts under the original rules even if they are not eligible for the full amount of Government vouchers. Parents, friends, family, and the child can all continue to contribute up to a total of £1,200 per year until the child reaches the age of 18, and no withdrawals can be made before this time.

Conclusion

For those families whose children were born during the appropriate time frame, the Child Trust Fund is an excellent way to ensure that your child starts their adult life with some security. The first deposit into the fund will be given to you by the Government, but where you invest the money and how much you add to it will be entirely up to you. You can choose to invest in three different types of accounts, and you can add up to £1,200 per year, but remember that no withdrawals can be made before the child’s 18th birthday.

About this Author

If you are interested in reading more information about child trust funds and investment plans then please visit the following links:

Scottish Friendly - mutual societies such as Scottish Friendly supply financial services products. Mutual societies are owned by customers, or members.

Association of Financial Mutuals – you can find out useful information about mutual and friendly societies by visiting http://www.financialmutuals.org

Share