What does the Child Bond offer?

Children grow so quickly, which means it's important to start thinking about their future when they're young. By saving from just £10 to £25 a month with Scottish Friendly's Child Bond now, you could make all the difference when they're older. For instance, helping to pay for university fees or for the deposit on a first home.

The Child Bond isn't just for parents to invest in. Whether you're a grandparent or an aunty, you can take out a Child Bond for any child you care about.

The Child Bond is a with-profits investment which runs for a minimum of 10 years and offers two valuable tax benefits:

• The money invested will grow free of Income Tax and Capital Gains Tax under current law through the addition of potential annual bonuses. Although bonuses are not guaranteed, once added, they cannot be taken away, provided you keep up payments for the full term.
• When the bond matures, your child will receive a guaranteed minimum cash sum, which protects part of the total amount invested. The value of the guaranteed sum is based on the term of the plan and how much is paid in.

Your money will be invested in our With-Profits Fund, over 10 years or more. This invests in stocks and shares, fixed interest funds and cash for long term growth as well as a degree of security. If the bond is cashed in before the end of the term, the child may not get back as much as has been paid in.

Life coverfor the child is also included with this plan so you should consider if this is appropriate.

How much can I save?

There are two options for saving:

Regular saving
You can save between £10 and £25 a month or between £120 and £270 a year.

Lump sum saving
This provides a way for you to take care of all your premiums at once and is especially popular with grandparents who like the reassurance of knowing all premiums for the full term of the plan are taken care of. It works by using your lump sum to set up a funding plan which invests in Scottish Friendly's taxable fund and guarantees to pay the annual premium into your tax-exempt Child Bond.

If you invest the maximum lump sum of £2,340 for a 10 year period, this actually invests £270 a year into the Child Bond - a total of £2,700. The minimum lump sum of £1,040 provides £120 a year for 10 years - a total of £1,200.

If you want the payout to mature on an 18th or 21st birthday, you may need the Child Bond to run for longer than 10 years. For example, if your child is 3 on their next birthday and you would like the Bond to mature on their 18th birthday, you would need a 15 year term - the maximum lump sum you could invest would be £3,190. Check the table below for the amounts you can invest for periods over 10 years:

Savings term	To save £120 a year	To save £195 a year	To save £270 a year
10 years	£1,040.00	£1,690.00	£2,340.00
11 years	£1,121.78	£1,822.89	£2,524.00
12 years	£1,200.44	£1,950.72	£2,701.00
13 years	£1,275.56	£2,072.78	£2,870.00
14 years	£1,348.00	£2,190.50	£3,033.00
15 years	£1,417.78	£2,303.89	£3,190.00
16 years	£1,484.44	£2,412.22	£3,340.00
17 years	£1,548.44	£2,516.22	£3,484.00
18 years	£1,609.78	£2,615.89	£3,622.00
19 years	£1,668.89	£2,711.94	£3,755.00
20 years	£1,725.33	£2,803.67	£3,882.00

How could the Child Bond grow?

The Child Bond gives you the security of a guaranteed minimum cash sum, which protects a part of the total amount invested. The value of the guaranteed sum is based on the term of the plan and how much is paid in. However, your the main long-term growth potential comes from bonuses which may be added to the guaranteed cash sum. As well as regular bonuses which may be added annually, a final bonus may also be added at the end of the term - a final bonus could make up a significant part of the total bonuses added. The value of bonuses depends on how much profit the With Profits Fund makes and how we decide to distribute it. As we don't have any shareholders, all our profits are shared among our members, like your chosen child. Although bonuses are not guaranteed, once added, they cannot be taken away, provided you keep up payments for the full term.

Scottish Friendly's past performance record

Compare our returns for yourself:

Return on £25 per month invested over 10 years

Past performance is not a guide to future performance. Bonuses are not guaranteed. If you cash in the Child Bond plan before the end of the term, the amount the child will get back may be less than the amount paid in. Your payments in the Child Bond are invested in Scottish Friendly's with profits fund where investment returns may fluctuate and are not guaranteed unlike a bank or building society account. In addition, bank or building society accounts have more certain growth prospects and easier access to your money.

^{1 Source: Morningstar's to 1/10/07. UK Savings £2,500 + Investment Gross. This is a Morningstar index which measures the performance of the savings accounts of a number of current and ex-building societies over 10 years to 1/10/07.}

^{2 Source: Scottish Friendly. Based on a plan for a child aged 6 next birthday at outset for an investment of £25 a month maturing on 1/10/07. Based on current tax law which may change.}

Apply now

Applying is easy. Simply click on the Apply Online Now link, read the Key Features and submit your application today.

When you start saving with us, we'll send you a £10 Book Token for your selected child.

If you apply for this product, for your records, we recommend you print or save a copy of this and any other relevant pages together with a copy of the Key Features.