Child Trust Funds: How Are Child Bonds Different?

If you want your child to have a strong financial future, it is critical that you start investing in that future now regardless of your child’s age. If your child is young, you can easily build a substantial nest egg for them, an egg that they can use for a smooth transition into adulthood. If your child is older, it is still not too late to take advantage of tax-free investment programs such as child bonds offered through Scottish Friendly. Doing so could mean the difference between a rocky financial start and a solid one.

When it comes to investing in your child’s future, there are many options that you can pursue. Savings accounts, bank accounts, trust funds and child bonds are all great ideas. You may even choose to invest in a portfolio of investment options to increase the amount that your child will receive when they reach adulthood. Regardless of what you decide, you should fully understand the pros and cons associated with each investment opportunity.

For the purpose of this article, we will focus on Scottish Friendly child bonds and see how they compare with other conventional investment options. The following are major points of comparison that you should be aware of:

• Growth – Scottish Friendly child bonds invest your money into a variety of stocks, shares, fixed-interest funds and cash savings. This provides a good opportunity for growth – it’s possible that you will make a 5%, 7% or even 9% return on your investment, based on the track record of child bonds (although past performance does not determine future performance). This amount can be substantially higher than what you can expect with some other types of investments.
• Stability – The mix of investment types protects your investment. While the investment in your child bond can grow or shrink according to market fluctuations, the mix of investment types protects your money while at the same time allowing it to grow. In other words, child bonds allow you to profit from stocks and shares without risking your entire investment.
• Availability – Many investment options do not allow you to cash in your investment at all until a certain date or maturity has been reached. Child bonds, on the other hand, allow you to cash in your policy anytime if the need arises.
• Payment Options – Child bonds from Scottish Friendly offer several investment payment options. You can choose to make small monthly payments, annual payments or a lump sum payment. Many other types of investments do not offer this variety of payment options. In fact, you may be required to have a substantial amount of money before you can invest at all.
• Tax Benefits – Most child bonds are tax free, meaning that there will be no income or capital gains tax to pay when your child reaches the age of maturity.

As mentioned before, there are several ways that you can invest in your child’s future. You may wish to invest in several different accounts as there is a cap to the amount of money that you can invest in a tax-free child bond. Regardless of how you choose to invest, you owe it to your child to investigate Scottish Friendly child bonds.