we have the baby bond in the UK, but its about twice as much.
http://www.thechildrensmutual.co.uk/motherandbaby/default.aspx?page=6
What is a Baby Bond® Child Trust Fund account?
The Children's Mutual Baby Bond® is a 'Stakeholder' CTF account – such accounts are the Government's preferred way of growing your child's savings. If you'd like to know more about stakeholder accounts in general, please see the Key Features.
The money is placed in a fund that invests in shares in leading UK companies, which could provide excellent growth potential. This is because the fund benefits both from automatically reinvesting the income from shares and from any overall rise in their value.
But can't shares go down as well as up? They certainly can and past performance should never be relied on as a guide to the future – your child could get back less than has been paid in (compared to a deposit account where the capital value of money paid in is guaranteed). However, there has only been one 18-year period since 1899 when deposit accounts have outperformed the stock market1.
The principle of Baby Bond® is simple. You save for your child and their money is invested to build into a lump sum. Nobody can touch the money but your child and then only when they are 18. Under current legislation there's no personal tax to pay either on the growth of the account or on the final payout.
One of the UK's biggest investment companies, Insight Investment Funds Management – which already manages over £96.6 billion on behalf of its customers – makes all the key investment decisions for the fund we use for Baby Bond®.
Source: Insight Investment Funds Management Limited. As at 30 June 2006.
For information about the fund, please see the Key Features.
Lifestyling
When your child reaches 13, we begin to move their money into lower risk investments such as Government bonds and cash deposits. This is called 'lifestyling'. The aim is to help reduce the impact of any potential fall in share prices as their 18th birthday approaches, which could mean their account loses value.
Our charges for the day to day management and administration of your child's account are capped at 1.5% of its value each year, in line with the Government's rules for Stakeholder Child Trust Fund accounts.
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I just post the stories, for interest.. for everyone
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