This page provides you with information on a tax efficient way to save for your child. My aim is to provide all the information you need to be able to make an informed decision. What I am about to share with you will explain:-

• Why people choose A.F.M. for advice on their investment choice.

• How we provide the information you need to help you make the right decision when it comes to setting up a child savings plan.

• How we can make the process easy for you.

• Why you may consider a Friendly Society savings plan for your child.

• How Friendly Society savings plans work and how we select the companies for our website.

• How a child's profits from a Friendly Society plan are tax free at maturity.

It all started with some research when I was setting up a savings plan for my own daughter. It wasn't until then, I realised how difficult it was to find information and independent financial advice, specifically aimed at helping parents and relations to save for their child's future.

"The AFM Experience"

As a result I decided to develop this specialist area on the website which has allowed us to offer child savings using our unique “AFM Child Savings Solution”. It is a step-by-step process to allow you to control how much information you need to make a decision on how to start saving for your child. This is done over the Internet, or by e-mail, post, fax, or telephone. It has been designed to deliver the solution without needing a sales person. It provides you with a unique buying experience, allowing you to control the process and to look at the issues that are important to you.

Most of our clients decide to start something on first contact. However, it has been known for some people to take up to a year to decide, after their original enquiry. This is what makes AFM unique as we work with you at your own pace. This is the most compelling reason why you shouldn't go anywhere else when making this important decision. Our aim is to understand what you need and what you are looking to achieve, deliver it to you at a time convenient to you, all in the comfort of your own home.

Firstly I want to share some of my research into children's savings plans and explain why you should consider Friendly Societies in particular.

How companies are selected for our website

I spent three months working with more than a dozen companies, who are generally regarded as some of the best in the market place. This meant more than 20 hours sat in meetings with their technical salespeople, researching their products, analyzing their systems and testing their administration. My studies have highlighted one of the leading players for “with-profit children's savings plans”. After all my research the company I have chosen to promote from my website is The Children's Mutual Friendly Society.

The 5 advantages a Friendly Society offers over other types of saving

Using a Baby Bond with profits savings plan, that invests your premiums in the Tunbridge Wells Equitable With-Profits Life and Endowment Fund, means you don't have to make any investment decisions as the Friendly Society does it for you. This kind of savings plan is designed for people who prefer to invest in a broad range of stock-market linked investments, in return for the potential for real capital growth. In doing so, you understand that you accept the risk of some capital loss, although you will receive the guaranteed minimum return at the end of the savings term.

• By using their investment expertise you get “smoothed returns” † on your savings, which means a more consistent return with a less volatile investment, thus helping to reduce the highs and lows of the stock market. † The idea behind smoothing is to reduce the risk and the volatility of your investment. Instead of simply sharing out what a collective fund makes or loses each year, a smoothed fund evens out some of the fluctuations in performance over the duration of your investment.

• Most importantly you can invest in your child's own name. Why is this important? Many investments for children need to be set up in their parent's name, which can cause tax complications for the parent.

• Anyone can take out a tax-exempt Friendly Society savings plan for a child, even if they are not a relation.

• Friendly Societies use a tax exemption granted by the Government for this type of investment. It means that no personal tax liability will arise at the end of the savings term. This favourable tax treatment is available under current legislation; however, tax rules can, and do, change from time to time.

Why the Children's Mututal Friendly Society offers some of the best returns

Track Record: You can invest safe in the knowledge that The Children's Mutual Friendly Society, the UK 's only dedicated children's savings specialist, have been offering savings plans for 123 years. They have won the Financial Adviser 5-Star Service Award for the 9th time in 2004; it's fair to say that they're the children's savings provider many Financial Advisers prefer. As well as receiving this prestigious acolade, they also received the 'Prima Baby' magazine's 'Best Buy' award in 2003 for their With-Profits saving plan and aim to retain their 5-star awards for many years to come. What more would you expect from the 2002 & 2003 Financial Adviser 'Company of the Year' and a leading provider of savings for children!
Source: The Children's Mutual Website April 2005

Guaranteed Minimum Return: This gives you the peace of mind they are one of the few societies in the U.K. still offering traditional style savings plans. The Children's Mutual Friendly Society Baby Bond provides a guaranteed minimum return. Most people don't want to take risks, especially when it comes to children's savings, which is why this type of investment is such a good one to consider.

You can start saving from as little as £25 a month

You can save up to £25 a month or £270 a year for each child free of income tax and capital gains tax liability. You can choose to save more than this but the investment will then not be tax free.

To avoid any tax liability the minimum savings period is 10 years. You can choose your child's eighteenth, or twenty first birthdays as the date for the investment to mature. At the end of your chosen term there's a guaranteed minimum payout. This uses your child's own Tax Allowance for Friendly Society savings and more importantly it is tax-free (provided all premiums have been paid throughout the policy term). The final value of the plan will obviously depend on how much you save and how many years you save over, as well as the investment performance of the societies ‘with profits fund'.

The things you should know about how your plan works

• The first one is that once bonuses are added , they form part of your guaranteed return and cannot be taken away; the only requirement is your policy runs to the specified date. If you decide to cash in your plan early, the bonuses will be reduced and you may get back less than has been paid in.

• You should also be aware that levels, bases and relief's from taxation are subject to change.

• Your returns are based on the level of bonuses, which depend on the performance of the society, as well as the distribution of the profits and cannot be guaranteed.

• It's important to remember that past performance is not necessarily a guide to future returns.

• You may not get back the full amount invested, although you will receive at least the minimum guaranteed return.