Child Trust Funds
Can the money be withdrawn?
No. It stays until your son or daughter reaches 18. The only exception is an unpleasant thought. If a child dies before 18, the money automatically goes to the parents or guardian. Provisions are also possible to release the money early for terminally ill children.
Choosing the right CTF type
Do you want to save or to invest for your child's future?
Saving means you're guaranteed to get back what you put in, plus interest. Investing means risking money in a stock market linked product in the hope of better returns, but the possibility you won't get back what you started with.
Conventional wisdom argues that over most 18 year periods stock markets outperform savings accounts, as there's time for market vagaries to cancel each other out. Yet it's still not risk free. Just ask anyone who suffered abysmally performing pension or endowment funds.
There is no right answer. The choice is down to your priorities. Get extra advice and information on the top paying accounts and working out the best investment.
Martin Lewis on iVillage!
TV presenter and journalist Martin Lewis is the UK's only professional money saving expert. For a complete version of this article and many more money-saving tips, visit the moneysavingexpert.com.
Why not chat to other iVillagers on the Money Matters message board. Take a look at some of the LIVE discussions taking place on the message board right now:
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