Friendly society bonds
Friendly societies are mutual organisations, like building societies, offering a small range of insurance and investment products. They can be attractive because they can offer tax-free investments which can make them ideal for parents who want to squirrel away money for children.
Friendly societies offer children’s savings plans, often known as baby bonds. They usually last 10 years. The maximum investment is currently £25 a month or £270 a year. Accounts can be opened by anyone, or on behalf of anyone, under 18. If you open one for a child the term usually lasts until they are between 18 and 21. This could mean the term is longer than 10 years, but the proceeds are still tax-free.
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TIP: You must hold the plan for the full 10 years for the returns to be tax-free.
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