If you don’t want to invest in shares, you could choose a savings account for your child’s Child Trust Fund account. With a savings account any money you invest is secure. For example if you invest £500, your child will get that sum of money back as well as earning some interest.
But you should consider that although your money earns interest, it might not grow as much as it would if it was invested in shares. Savings accounts do not usually perform as well as money invested in shares over the long term, especially when inflation is taken into account. The effect of inflation means that money in the account could lose value over the long term. This is because prices usually rise each year and so £20 won’t buy you as much today as it did ten years ago.
As with all accounts your provider will charge you for the cost of running it. You might not notice this cost as it will not appear on your statement, but providers cover these costs when deciding how much interest to pay on savings. This is something you should check before deciding to open an account.
More information
Types of account
Accounts that invest in shares
Stakeholder account
FAQ
Further information about types of account
