Child Trust Funds
In the U.K., many financial advisers recommend that parents invest the money they save for their children's university education, with the goal of generating better returns than those of a savings account and benefitting from some tax advantages. The government has set up a Child Trust Fund, with an initial savings voucher for £250 (or £500 for low-income families) for every child born after 2002. Parents or other family members or friends can then contribute up to £1,200 per year to the account, tax-free. When the child reaches seven years of age, the government will make a further payment of £250 (or £500 for low-income families). There are three types of Child Trust Fund accounts. Investment and stakeholder accounts put the money in stocks and shares, while ordinary savings accounts are for cash deposits.
These types of funds do not exist everywhere; for instance, in India, there is no specific public savings plan, as the government subsidises higher education.
