By Jack Cardenas-Storey

Any new babies from the 1st September 2002 will have received their £250 Child Trust Fund (CTF) voucher to help youngsters with a better financial start in life.   Their parents or guardians must invest these vouchers in approved CTF's with the aim of giving the child a healthy nest egg when they turn 18, which hopefully by them having their own investment, the child will appreciate the importance of saving and investing.

An advantage of the CTF account is that you can contribute a further amount of £1,200 per annum and will be free from income and capital gains tax.

School, University fees, a first car, a deposit for their first home, paying for the wedding, some of the many things that your child will need and want assistance on.

The sooner you start to invest, the easier it will be to provide the funding that they will need to have a good start in life.

Experienced investors will already know that the stock market regularly rises and falls, with share values constantly fluctuating but over the long term, however, these ups and downs tend to level out potentially giving a far better return than the average building society account.

For many of today's students, higher education means little or no grant, and a hefty student loan that will need repaying once they start their careers and are earning £15,000 per annum, even though they may be struggling on a relatively low starting salary.

It's becoming increasingly common for parents to remortgage or take out new loans to help their children through the university years. That's why it makes sense to start investing either a lump sum amount or a regular amount on a monthly basis over a long period of time through out your childs life.

In the right and tax efficient investment, even a small monthly contribution of £100 can soon grow into a substantial amount. If you invest through a unit trust vehicle in an Individual Savings Account (ISA), it can grow tax free and can give a high yield.

If you want to make an investment as a gift to a child, the simplest way is to put the units in the adult's name but with a designation of the child's initials on the application form.

It is also recommended that you lodge a letter of evidence of the making of the gift with your bank or professional adviser, should the Inland Revenue ever require it.

Designating the account allows you to retain control over the investment.

The price of units and any income from them can go down as well as up. This means that you might get back less than you invest.

Past performance is not a guarantee to future performance.

Always look and read carefully at the Key Features Documents.

Bluestone Asset Management is a fee based independent financial adviser firm based in London. We provide free interactive learning modules about finance and money on our main site http://www.bluestoneam.co.uk

The above information is not intended as advice under the Financial Services and Markets Act 2000

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