Anyone who’s had a baby in the last four years will have been entitled to the government’s £250 lump sum (more for families on low incomes) to invest in a Child Trust Fund. Although the money can’t be touched until the child reaches 18 years of age, it’s free from income and capital gains tax.
The question is where to invest it. There are three types of Child Trust Fund: a cash savings account, a stakeholder account where the money will be invested in shares and then gradually shifted into less risky investments after the child’s 13th birthday (known as ‘lifestyling’), and a non-stakeholder account for the more adventurous parents who want to choose where to invest the money….