Equity Funds

Shares have traditionally given the best long term returns, so if you are saving from when a child is very young these may be your best option (however they also carry the most risk). Provided that you purchase shares from a stable company you can reduce this risk, however if you are willing to take more of a risk you may find that your returns could be much better, however with shares there is always the danger that the prices may plummet, and unless you have a particularly good business knowledge it is probably best that you avoid the high risk shares, or be prepared to seek financial advice.

There are two types of shares:

The Ordinary share; These are reasonably high risk, the return on your money is based on the performance of the company, usually the return is paid out quarterly, however if the company has a bad few months you may receive nothing. In extreme cases or in instances where the company invested in goes bankrupt, you may loose some of your invested funds. If the company is doing well however, the dividend that is paid to you will reflect this.

The preference share; This venture is a much lower risk, however not all companies will offer this to you. The preference share will pay out a fixed dividend regardless of how well the company is doing. Preference shareholders will always be paid first.

Shares can not be given to anyone under the age of 18, so the share will have to be set up in a parent or relatives name until the child reaches the appropriate age. For these reasons it will usually be necessary to set up a bare trust. This will require you to put the child's initials in the appropriate box on the application form.

There are many deals that are offered by firms, designed for children are package deals. These collective funds or unit trusts will invest your money in a variety of different areas; spreading the risk.

Isis, launched a 'Zero Charge Children's savings Plan', offering you investment opportunities with eight of its investment trusts. The minimum you can invest each month is £50 or a lump sum of £500 per trust.

The Invesco Perpetual Rupert Children's Fund, invests in predominantly, British companies, and asks for a minimum of £20 per month, or a £50 lump sum.

There are many different types of funds to invest money into, above are some of the package deals, however, investing in a single unit or investment trust, based on the merits of its performance can be as rewarding, if not more so, however also slightly more risky.

Below are links relating to Equity Funds:

www.Investments.co.uk has information on everything you need to know about making the most of your money. You can also visit us at Link: www.insurances.co.uk to get the best deals on your car insurance.

 

UK Investments - Financial, Property & Other Investments - 1998-2008

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