Parents invest children's money in cash accounts
Cash accounts are parents' most popular choice for investing their children's money claims a new report.
Some 70 per cent of the government-issued child trust vouchers are being placed into cash accounts, rather than in stakeholder funds, the Building Societies Association (BSA) has revealed.
Under the new scheme, the parents of children born after September 1st 2002 are sent a child trust voucher which can be invested by the parents in any way they choose.
The savings can be added to by friends and family to a total of £1,200 in contributions per year. The money is interest tax-free and once the child turns 18, the inheritance money can then be claimed.
The BSA reports that in June 2005, over 50,000 cash accounts were opened by parents, although one voucher in four is lost by parents. If a voucher has not been invested within a year of its issue, the government will automatically invest the money.
"Anecdotal evidence suggests that many parents have still not decided where to put their child's voucher. We believe that parents should have the choice between cash and equity investments and building societies are helping to give them that choice," said Brian Morris, head of savings policy at the Building Societies Association. | 
