Stakeholder Child Trust Fund (CTF) accounts have to include certain features set by the government. They’re designed to make them suitable for a long-term investment for a child – especially for families who are new (or fairly new) – to investment products.
Features of Stakeholder Child Trust Fund accounts
Stakeholder Child Trust Fund accounts need to:
- Invest in a way that’s linked to shares
To take advantage of the greater potential long-term returns historically offered by shares (but remember that past performance is not a guide to the future)
- Invest in a way that spreads risk
So that investment is spread over a range of company shares
- Address the risk of share prices falling as the child nears 18
From the child’s 15th birthday, stakeholder Child Trust Fund accounts must allow money to be moved from shares to lower risk investments
- Limit charges
To no more than 1.5% of the account’s value each year
- Accept affordable additional contributions
Allow people to make additional payments into the account from as little as £10.
It’s these features that make stakeholder Child Trust Funds the government’s preferred option for a Child Trust Fund account.
This doesn’t mean that stakeholder Child Trust Fund accounts are right for everyone or guaranteed to perform well. As investment is linked to shares, the value of the account can fall as well as rise and your child could get back less than has been paid in.